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Farrington Company uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials
Farrington Company uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the upcoming year and their allocation bases are as follows: (Click the icon to view the data.) Farrington Company expects to produce 1,000 chrome wheels during the year. The wheels are expected to use 3,000 parts, require 10 setups, and consume 2,000 hours of finishing time. (Click the icon for completed job data.) Read the requirements. .. Activity cost Total activity overhead (est.) allocation rate Total activity allocation base 3,000 Mat. handling $ 12,000 = $ 4 per part Mach setup $ 3,400 10 = $ 340 per setup Insertion $ 48,000 3,000 $ 16 per part Finishing $ 80,000 2,000 = $ 40 per hour Requirement 2. Compute the manufacturing overhead cost that should be assigned to Job 420. Activity MOH Cost Materials handling Machine setup Insertion of parts Finishing Total - Data table Total Budgeted Manufacturing Overhead Cost Activity Allocation Base $ Materials handling Machine setup Insertion of parts 12,000 Number of parts 3,400 Number of setups 48,000 Number of parts 80,000 Finishing direct labor hours 143,400 Finishing . $ Total Print Done x More info Job 420 used 100 parts, required 3 setups, and consumed 150 finishing hours. Job 510 used 425 parts, required 6 setups, and consumed 350 finishing hours. Print Done
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