Question
Frederick Company uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials
Frederick 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:
Frederick Company expects to produce 1,000 chrome wheels during the year. The wheels are expected to use 2 comma 900 parts, require 15 setups, and consume 1 comma 800 hours of finishing time.
Job 420 used 300 parts, required 4 setups, and consumed 150 finishing hours.
Job 510 used 500 parts, required 6 setups, and consumed 340 finishing hours.
Total Budgeted Manufacturing Activity Overhead Cost Allocation Base Materials.handling. .... $ 8,700 Number of parts Machine setup. . . . . ... 4,650 Number of setups Insertion of parts. ..... Number of parts 49,300 75,600 Finishing.... Finishing direct labor hours $ 138,250 Total ..... I L L . . . . . . . . . . . . . . . Requirement 1. Compute the cost allocation rate for each activity. First identify the formula, then compute the rate for each activity. Mat. handling Activity cost allocation rate per part per setup per part per hour Mach setup Insertion Finishing 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 Requirement 3. Compute the manufacturing overhead cost that should be assigned to Job 510. Activity MOH Cost Materials handling Machine setup Insertion of parts Finishing Total Requirement 1. Compute the cost allocation rate for each activity. First identify the formula, then compute the rate for each activity. Activity cost allocation rate per part per setup per part per hour Mat. handling Mach setup Total activity allocation base Total activity overhead (est.) Insertion Total assets Finishing Total hours Total liabilities Requirement 2.C Total owners' equity Activity Total plantwide overhead Total revenues Materials handling Machine setup Insertion of parts cost that should be assigned to Job 420. Finishing Total Requirement 3. Compute the manufacturing overhead cost that should be assigned to Job 510. Activity MOH Cost Materials handling Machine setup Insertion of parts Finishing TotalStep by Step Solution
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