Question
Question 3 X Company produces many different products within the same manufacturing plant. It currently uses a single driver, plantwide allocation system to allocate its
Question 3 X Company produces many different products within the same manufacturing plant. It currently uses a single driver, plantwide allocation system to allocate its overhead, with direct labor hours as the most appropriate cost driver. Estimated direct labor hours for 2015 are 90,000; estimated overhead is $168,000.
Assume the following information for one of its products, Product 1, in 2015:
Direct materials | $67,600 |
Direct labor | $15,552 |
Direct labor hours | 972 |
Machine hours | 1,850 |
3. Using the single driver system, allocate overhead to Product 1 (round overhead rate(s) to two decimal places).
Question 4 Assume that X Company has decided to switch to a departmental allocation system. It has two departments, and will use direct labor hours as the cost driver in Department 1 and machine hours as the cost driver in Department 2. The following are budgeted costs and driver amounts for these two departments in 2015:
Department 1 | Department 2 | |
Overhead | $110,000 | $58,000 |
Direct labor | $640,000 | $800,000 |
Direct labor hours | 40,000 | 50,000 |
Machine hours | 110,000 | 140,000 |
Assume the following information for Product 1 in 2015:
Department 1 | Department 2 | |
Direct labor | $12,176 | $3,376 |
Direct labor hours | 761 | 211 |
Machine hours | 1,030 | 820 |
4. Using the departmental system, allocate overhead to Product 1 (round overhead rate(s) to two decimal places).
Question 5 Assume that X Company has decided to switch to an activity-based costing allocation system. It has identified three activities with the following budgeted costs and cost drivers for 2015:
Activity | Budgeted cost | Cost driver |
Purchasing | $33,600 | 4,600 purchase orders |
Assembly | $84,000 | 89,200 parts |
Packaging | $50,400 | 11,500 finished units |
5. Assume that 569 unis of Product 1 were finished in 2015, requiring 1,274 parts and 42 purchase orders. Using the activity-based costing system, allocate overhead to Product 1 (round overhead rate(s) to two decimal places).
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