Managerial Accounting Chapter 5

Review Problem on Cost Drivers and Product-Cost Distortion Edgeworth Box Corporation manufactures a variety of special packaging boxes used in the pharmaceutical industry. The company's Dallas plant is semiautomated, but the special nature of t boxes requires some manual labor. The controller has chosen the following activity cost pools, cost drivers, and pool rates for the Dallas plant's product-costing systerBudgeted he Level for Cost Pool Rate B Driver $1,000,000 5,000 hrs. Overhead Cost Cost Driver Activity Cost Pool Purchasing, storage, 20% of material cost Raw-material costs Hours in design $ and materlal handling. Engineering and produc 20000 $20per hour 100,000 70,000 Production nuns design ,000 runs $70per run 100,000 hrs $3 per hour 100,000 hrs. $2 per hour Machine setup costs Machine depreciation and maintenance insurance, and utilities. costs 300,000 Machine hours 200,000 Machine hours 150,000 Machine hours 100,000 hrs. $1.50per hour 3G Factory depreciabion, laxes, ??#6 8496 Total $1,020,000 ?. 42 of Box W29L12 s35,000 B Two recent production orders had the following requirements. 10,000 Units 21 hr 25 20 20,000 Units of Box C52 42 h Direct-labor hours... Raw-material cost Hours in design department Production runs... Machine hours.... ?? $40,000 10 Required Compute thetotal overheadthat should be assigned to each of the two production orders C52 anc W29 Compute the overhead cost per box in each order. Suppose the Dallas plant were to use a single predetermined overhead rate based on direct-labor hours. The direct-labor budget calls fort 4,000 hours 1. a. Compute the predetermined overhead rate per direct-labor hour Compute the total overhead cost that would be assigned to the order for box C52 and the order for box W29. Compute the overhead cost per box in each order. C255) C. do the two product yield such widely differing overhead r box