Hall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons The metal used in Standard is easy to work with and there are few quality issues or reworking required on the machines The metal used in Ultra is more difficult to work with and often needs additional machine time and rework Data on expected operations and direct costs for the next fiscal year follow Standard Ultra Total Units produced 41,000 13,000 54,000 Direct labor hours used 123,000 22,500 145,500 Machine hours used 20,500 22,500 43,000 Direct materials costs $ 3,097,000 $ 3,700,000 $ 6,797,000 Direct labor costs $ 2,520,000 $ 855,000 $ 3,375,000 The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year Account Amount Administration $ 825,400 Engineering $ 3,603,000 Machine Operation Maint $ 840,000 Miscellaneous $ 540,100 Supervision $ 884,500 Total $ 6,693,000 The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product Overhead costs are allocated based on direct labor hours Required a Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system b An analyst on the planning process team suggests that a two stage system would improve the estimated product costs The analyst suggests that overhead be first assigned to on one of two cost pools Machine related and labor related Machine related overhead consists of the accounts Engineering and Machine operation and maintenance Labor related overhead consists of the remaining manufacturing overhead Machine related costs would be allocated based on machine hours Labor related overhead would be allocated based on direct labor cost Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst PLEASE DO STEP BY STEP ON EACH ITEM

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Posted on Sep 12, 2024

Hall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons.

Hall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons. The metal used in Standard is easy to work with and there are few quality issues or reworking required on the machines. The metal used in Ultra is more difficult to work with and often needs additional machine time and rework.

Data on expected operations and direct costs for the next fiscal year follow:

	Standard	Ultra	Total
Units produced	41,000	13,000	54,000
Direct labor-hours used	123,000	22,500	145,500
Machine-hours used	20,500	22,500	43,000
Direct materials costs	$ 3,097,000	$ 3,700,000	$ 6,797,000
Direct labor costs	$ 2,520,000	$ 855,000	$ 3,375,000

The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year:

Account		Amount
Administration		$ 825,400
Engineering		$ 3,603,000
Machine Operation & Maint.		$ 840,000
Miscellaneous		$ 540,100
Supervision		$ 884,500
Total		$ 6,693,000

The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product. Overhead costs are allocated based on direct labor-hours.

Required:

a. Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system.

b. An analyst on the planning process team suggests that a two-stage system would improve the estimated product costs. The analyst suggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine-related overhead consists of the accounts "Engineering" and "Machine operation and maintenance." Labor-related overhead consists of the remaining manufacturing overhead. Machine-related costs would be allocated based on machine-hours. Labor-related overhead would be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst.

PLEASE DO STEP-BY-STEP ON EACH ITEM!