questions 4 and 5

1. Departmental overhead rates:

Department Overhead Costs $ Machine Hours Overhead Rate

Radiator parts fabrication 80000 10000 $ 8 per machine hour

Radiator assembly, weld, and test 100000 20000 $ 5 per machine hour

Compressor parts fabrication 120000 5000 $ 24 per machine hour

Compressor assembly and test 180000 45000 $ 4 per machine hour

2. Company-wide overhead rate = $480000/80000 = $6 per machine hour

3(a)

MaxiFlow Alaska

Number of hours for each batch 116 164

Company-wide overhead rate per hour $ 6 $ 6

Overhead costs per batch $ 696 $ 984

3(b)

MaxiFlow Alaska

Hours Overhead Rate $ Total Overheads $ Hours Overhead Rate $ Total Overheads $

Radiator parts fabrication 28 8 224 16 8 128

Radiator assembly, weld, and test 30 5 150 74 5 370

Compressor parts fabrication 32 24 768 8 24 192

Compressor assembly and test 26 4 104 66 4 264

Overhead costs per batch 1246 954

Per Chegg guidelines the first 4 sub-parts have been answered. Please post the remaining separately. Thank you.

CASE 3A - AUERBACH ENTERPRISES Auerbach Enterprises manufactures air conditioners for automobiles and trucks manufactured throughout North America. The company designs its products with flexibility to accommodate many makes and models of automobiles and trucks. The company's two main products are MaxiFlow and Alaska MaxiFlow uses a few complex fabricated parts, but these have been found easy to assemble and test. On the other hand, Alaska uses many standard parts but has a complex assembly and testing process. MaxiFlow requires direct materials costs which total $135 per unit, while Alaska's direct materials requirements total $110 per unit. Direct labor costs per unit are $75 for MaxiFlow and $95 for Alaska, Auerbach Enterprises uses machine hours as the cost driver to assign overhead costs to the air conditioners. The company has used a company-wide predetermined overhead rate in past years, but the new controller, Bennie Leon, is considering the use of departmental overhead rates beginning with the next year. The following planning information is available for the next year for each the four manufacturing departments within the company: Overhead Costs Radiator parts fabrication.......... $ 80,000 Radiator assembly, weld, and test.... 100,000 Compressor parts fabrication....... 120.000 Compressor assembly and test........ 180.000 Total $480.000 Machine Hours 10,000 20.000 5.000 45.000 80.000 Normally, the air conditioners are produced in batch sizes of 20 at a time. A production batch of 20 units requires the following number of hours in each department: Alaska MaxiFlow Radiator parts fabrication.......... Radiator assembly, weld, and test....... 30 Compressor parts fabrication......... Compressor assembly and test... Total 26 66 116 164 Required: 1. Compute the departmental overhead rates using machine hours as the cost driver. 2. Compute a company-wide overhead rate using machine hours as the cost driver 3. Compute the overhead costs per batch of MaxiFlow and Alaska assuming: (a) The company-wide rate. (b) The departmental rates. 4. Compute the total costs per unit of MaxiFlow and Alaska assuming: (a) The company-wide rate. (b) The departmental rates. 5. Is one product affected more than the other by use of departmental rates rather than a company-wide rate? Why or why not