Answered step by step
Verified Expert Solution
Question
1 Approved Answer
In a normal year, Maroone Inc normally runs about 20,000 direct labor hours. In 2017 the company identified the following overhead costs and activity drivers
In a normal year, Maroone Inc normally runs about 20,000 direct labor hours. In 2017 the company identified the following overhead costs and activity drivers for the year 2018. | After production began in 2018, the company made two products. Details of those are below... | ||||||||
Overhead Item | Expected in 2018 | Model SS | Model TT | ||||||
Setup Costs | $150,000 | Direct Materials | $2,250 | $2,500 | |||||
Ordering costs | $40,000 | Direct labor | $3,000 | $1,875 | |||||
Maintenance | $200,000 | Units completed | 375 | 300 | |||||
Power | $20,000 | DLHs | 90 | 110 | |||||
Kilowatt hrs | 100,000 | # of setups | 6 | 8 | |||||
Machine hrs | 16,000 | # of orders | 8 | 15 | |||||
# of orders | 10,000 | Machine hrs | 180 | 150 | |||||
# of setups | 1,200 | Kilowatt hrs | 90 | 120 | |||||
Hours per unit | |||||||||
SS | 0.24 | ||||||||
1. Determine the unit cost for each job using direct labor hours to apply overhead. |
| TT | 0.37 | ||||||
a. determine the predetermined rate | $20.50 | per hour | |||||||
b. apply the rate to the two products | Model SS: | $1,845.00 | Model TT: | $2,255.00 | overhead per unit | ||||
c. calculate total unit cost of each product | Model SS: | $18.92 | Model TT: | $22.10 | ss | $4.92 | |||
tt | $7.52 | ||||||||
2. Determine the unit cost for each job using the 4 activity drivers (round amounts to 2 decimal places). | |||||||||
a. determine the 4 activity rates | |||||||||
b. apply the rates to the two products | |||||||||
c. calculate total unit cost of each product |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started