Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Sheridan, Inc. produces two types of gas grills: a family model and a deluxe model. Sheridan's controller has decided to use a plantwide overhead rate
Sheridan, Inc. produces two types of gas grills: a family model and a deluxe model. Sheridan's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently 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 below is information related to the company's operations: Total estimated overhead costs are $433,800. Overhead cost allocated to the machining activity cost pool is $260,280 and $173,520 is allocated to the machine setup activity cost pool. (a) Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 15.25.) Bonita Toys \& Games, Inc. manufactures specialty toys. Bonita uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Bonita assigns its quality-control overhead costs to all products at a rate of 21% of direct labor costs. Its direct labor cost for the month of August for its toddler line of toys is $309,000. In response to repeated requests from its financial vice president, Bonita's management agrees to adopt activity-based costing. Data relating to the toddler line of toys for the month of August are as follows: (a) Compute the quality-control overhead cost to be assigned to the toddler toy line for the month of August (1) using the traditional product costing system (direct labor is the cost driver), and (2) using activity-based costing. Bonita Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20000 units annually. Planter is a low-volume item totaling only 6000 units per year. Flower requires one hour of direct labor for completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32000(20000+12000). Estimated annual manufacturing overhead costs are $980000. Bonita uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of $30.63. $37.69. $61.25. need more information to compute
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