Peart proposed a revised cost system where they first identify material-related overhead (the cost of receiving and handling material), and allocate that cost to each product line based on the cost of material. Second, he suggested that they measure set-up labor, remove it form total overhead, and assign it to each product line. Finally, he suggested that they substitute machine hours for labor dollars as the basis for allocating the remaining factory overhead.

What is the total cost to produce a "Guitar" under this system?

Alex, suggested an alternative method where they allocate overhead costs as a function of transactions. Based on the dataprovided inExhibit 3, and the suggestion to "allocate overhead costs as a function of transactions related to each overhead cost," what is the cost of Receiving per transaction?

Alex, suggested an alternative method where they allocate overhead costs as a function of transactions. They could then allocate costs unrelated to transactions like

Engineering based on the engineering workload, and maintenance and depreciation based

on machine hours.

University X Midterm 0 X Lecture Vi X * Ask a Que X _ Overhead X Caress_of X w Tax Resea X w ACCTG 63 X Ask a Que X Caress_of X how to tak X C File | /Users/mengruan/Documents/ACCTG%206910/Caress_of_Steel_Machining.pdf YAB Apps = Textbook U Transcript Key - O... . Heze @ JE"X" MAX... TSH Sims 4 Lots US US Foods Order w Tax Research Not... w ACCTG 6320 Lect... Caress_of_Steel_Machining_V2 6/ 6 Exhibit 3: Monthly Overhead Activity Analysis Guitars Bass Guitars Drums Total Receiving: Receive each 12 Transactions 75 Transactions 300 Transactions 387 Transactions component once per run Materials Handling: Handle each 12 Transactions 75 Transactions 300 Transactions 387 Transactions component Packing and Shipping: One packing order 3 Transactions 21 Transactions 66 Transactions 90 Transactions per shipment Engineering: Estimated 20% 30% 50% 100% engineering workload percentage (subjective) Maintenance and Depreciation Machine hours basis 3,000 Hours 5,000 Hours 1,000 Hours 9,000 Hours +