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Greenbrier Manufacturing is the producer of two qualities of jet airplane instrument panels, (1) premium and (2) turbo. During October, the company experienced above normal
Greenbrier Manufacturing is the producer of two qualities of jet airplane instrument panels, (1) premium and (2) turbo. During October, the company experienced above normal production. Specifically, 800 premium panels were produced, and 100 turbo panels were produced. The overhead cost is estimated to be $134,250. A breakdown of the overhead costs reveals the following activities: ACTIVITIES COST DRIVERS TOTAL COST 1. Materials handling Number of requisitions $ 52,500 2. Equipment setup Number of setups 41,250 3. Inspections Number of inspections 40.500 S 134.250 The cost analysts determined the following cost driver volumes for each product as follows: COST DRIVERS PREMIUM TURBO TOTAL Number of requisitions 500 1.200 Number of setups 500 800 Number of inspections 250 750 700 300 500 INSTRUCTIONS: 1. Compute the overhead rate for each activity. 2. Determine the amount of overhead costs that should be assigned to each product. 3. Assume instead of ABC, the traditional method of overhead assignment used direct labor costs to assign overhead. Total direct labor hours are approximately 1,600 hours where premium used 1,067 hours and turbo used 533 labor hours. Determine the amount of overhead cost that would be assaned to each of the two products
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