Recommended Cost Driver Number of orders Number of production runs Pounds of materials used Machine-hours Number of inspections Number of units Estimated Cost $ 41,000 209,000 300,000 Activity Processing orders Setting up production Handling materials Machine depreciation and maintenance Performing quality control Packing Total estimated cost Estimated cost Driver Activity 299 orders 110 runs 120,000 pounds 11,000 hours 45 inspections 470,000 units 231,000 56,700 117,500 $955,200 23 In addition, management estimated 7,600 direct labor-hours for year 2 Assume that the following cost driver volumes occurred in January, year 2 Institutional Standard Silver Number of units produced 60,000 21,800 8,000 Direct materials costs $41,000 $26,000 $13,000 Direct labor-hours 490 450 620 Number of orders 12 10 Number of production runs 4 Pounds of material 17,000 7,000 2,600 Machine hours 600 120 80 Number of inspections Units shipped 60,000 21,000 8,000 4 6 6 4 4 Actual tabor costs were $16 per hour. Dana Required: a. (1) Compute a predetermined overhead rate for year 2 for each cost driver using the estimated costs and estimated cost driver units prepared by the consultant (2) Compute a predetermined rate for year 2 using direct labor hours as the allocation base. b. Compute the production costs for each product for January using direct labor hours as the allocation base and the predetermined rate computed in requirement a(2) c. Compute the production costs for each product for January using the cost drivers recommended by the consultant and the predetermined rates computed in requiremento (Note: Do not assume that total overhead applied to products in January will be the same for activity-based costing as it was for the labor-hour-based allocation) Req A1 Req A2 Req B Reqc Compute a predetermined overhead rate for year 2 for each cost driver using the estimated costs units prepared by the consultant. (Round your answers to 2 decimal places.) Rate Activity Processing orders Setting up production Handling materials Using machines Performing quality control Packing per order per run per pound per machine hour per inspection per unit I HAI Req A2 > b. Compute the production costs for each product for January using direct labor-hours as the de rate computed in requirement (2) c. Compute the production costs for each product for January using the cost drivers recommended by the consultant and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in January will be the same for activity based costing as it was for the labor hour based allocation) Complete this question by entering your answers in the tabs below. Reg A2 Reg A1 Reg B Reqc Compute a predetermined rate for year 2 using direct labor-hours as the allocation base. (Rolnd your answer to 2 decimal places.) Predetermined rate por direct labor Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Req B Reqc Compute the production costs for each product for January using direct labor-hours as the allocation base and t predetermined rate computed in requirement a(2). (Do not round intermediate calculations.) Total Institutional Standard 41,000 $ 26,000 $ Silver 13,000 $ 80,000 Account Direct materials Direct labor Indirect costs Total cost Req A1 Req A2 Req B ReqC Compute the production costs for each product for January using the cost drivers recommended by the cons predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to produ be the same for activity-based costing as it was for the labor-hour-based allocation.) (Do not round interme calculations.) Institutional Standard $ 41,000 $ 26,000 Silver 13,000 Total 80,000 Account Direct materials Direct labor $ $ Indirect costs Processing orders Setting up production Handling materials Using machines Performing quality control Packing Total cost
