Q1:

Crane Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented here is information related to the company's operations. Standard Custom Direct labor costs $50,000 $100,000 Machine hours 1,000 1,000 Setup hours 100 400 Total estimated overhead costs are $270,000. Overhead cost allocated to the machining activity cost pool is $164,000, and $106,000 is allocated to the machine setup activity cost pool. (a) Compute the overhead rate using the traditional (plantwide) approach. Predetermined overhead rate % of direct labor costSheridan Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes, As part of its annual budgeting process, Sheridan is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be assigned to each product line. The following information relates to overhead. Mobile Safes Walk-In Safes Units planned for production 200 50 Material moves per product line 350 200 Purchase orders per product line 500 100 Direct labor hours per product line 900 1,600 (a) The total estimated manufacturing overhead was $270,000. Under traditional costing (which assigns overhead on the basis of direct labor hours). what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 15.25.) 1. One mobile safe 2. One walk-in safe Manufacturing overhead $ each $ eachCarla Vista, Inc., uses a traditional product costing system to assign overhead costs uniformly to all its packaged multigrain products. To meet Food and Drug Administration requirements and to assure its customers of safe, sanitary, and nutritious food, Carla Vista engages in a high level of quality control. Health'R Us assigns its quality-control overhead costs to all products at a rate of 17% of direct labor costs. Its direct labor cost for the month of June for its low-calorie breakfast line is $70,000. In response to repeated requests from its financial vice president, Carla Vista's management agrees to adopt activity-based costing. Data relating to the low-calorie breakfast line for the month of June are as follows. Number of Cost Overhead Drivers Used Activity Cost Pools Cost Drivers Rate per Activity Inspections of material received Number of pounds $0.60 per pound 7,700 pounds In-process inspections Number of servings $0.32 per serving 10,100 servings FDA certification Customer orders $12.00 per order 510 orders (a) Compute the quality-control overhead cost to be assigned to the low-calorie breakfast product line for the month of June 1. using the traditional product costing system (direct labor cost is the cost driver), Quality control overhead cost assigned $Overhead Drivers Used Activity Cost Pools Cost Drivers Rate per Activity Inspections of material received Number of pounds $0.60 per pound 7,700 pounds In-process inspections Number of servings $0.32 per serving 10,100 servings FDA certification Customer orders $12.00 per order 510 orders (a) Compute the quality-control overhead cost to be assigned to the low-calorie breakfast product line for the month of June 1. using the traditional product costing system (direct labor cost is the cost driver). Quality control overhead cost assigned $ 2. using activity-based costing. Quality control overhead cost assigned $