Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Robolamo manufactures three different models of robot lawn mowers (LawnFighter, LawnWarrior, and LawnLord). All lawn-mowing robots are high quality products and equipped with important security
Robolamo manufactures three different models of robot lawn mowers (LawnFighter, LawnWarrior, and LawnLord). All lawn-mowing robots are high quality products and equipped with important security features. Various programming possibilities and smart technological features make the automatic lawn mowers reliable assistants in the garden. For Robolamos customers exhausting lawn-mowing belongs to the past. The three models differ in their programming possibilities and technological features like remote control via Smartphone-Apps. Robolamo uses an absorption costing system that absorbs manufacturing overhead to the three models based on direct labor hours. The single plantwide manufacturing overhead rate is predetermined before the beginning of the fiscal year using a flexible manufacturing overhead budget. Variable manufacturing overhead is budgeted to be 9.30 per direct labor hour, and fixed manufacturing overhead is budgeted to be 4,120,000. Direct labor is budgeted at 25.00 per direct labor hour. The following table summarizes the budgeted and actual results of operation for the year: Required: a. Calculate the firmwide overhead rate per direct labor (DL) hour for the year (round to four decimals). The overhead rate is calculated before the fiscal year begins. b. A batch of 830 units of model LawnFighter is produced using 320 direct labor hours. How much overhead is absorbed by this batch of 830 models LawnFighter? c. Actual overhead incurred during the year was 5,300,500. Calculate the amount of over- or underabsorbed overhead for the year. d. Robolamo writes off any over-/underabsorbed overhead to cost of goods sold. What is the effect on earnings of writing off the over-/underabsorbed overhead calculated in part (c) on net income? In other words, does net income increase or decrease relative to what net income was prior to the writeoff of the over-/underabsorbed overhead calculated in part (c)
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