Solution for the Managerial Accounting Maher 11th edition, Chapter 3 problem 40 showing that the direct labor $50 dollar/ hour. Would you explain how do we get that amount. Thanks

We have solutions for your book! Problem 40PSC: Chapter 03 Problem: 40PS ABC and predetermined overhead rates. Assume that SunSpecs Corporation makes three types of sunglasses, Razors, Slims, and Eagles, major retailers such as Ray-Ban and Gucci. SunSpecs presently applies overhead using a predetermined rate based on direct labor hours. A consultant recommended that SunSpecs switch to activity-based costing Management decided to give ABC a try and identified the following activities, cost drivers, and estimated costs for Year 2 for each activity center R uststest Hand Pounds of t e P The company estimated 10,000 labor hours would be worked in all of Y 2. Assume the following activities occurred in February of Year 2: of wisdeed. a. Compute an overhead allocation rate for each of the cost drivers recommended by the consultant and for direct labor. b. Compute the production costs for each product for February using the cost drivers recommended by the consultant C. Compute the production costs for each product for February using dir labor hours as the overhead allocation base. d. Management has seen your numbers and wants to know how you account for the discrepancy between the product costs using only direct ours as the overhead allocation base and the product costs using activity-based costing. Write a briefresponse to management. Estimated Activity Recommended Cost Driver Annual Costs Annual Cost Driver Units Production Setup Order Processing Materials Handling Equipment Depreciation and Maintenance Quality Management Packing and Shipping Total Estimated Overhead ...... Number of Production Runs Number of Orders Pounds of Materials Used Machine Hours Number of Inspections Number of Units Shipped 560,000 100,000 40,000 120,000 100,000 80,000 $500,000 200 400 16,000 20,000 800 80,000 he company estimated 10,000 labor hours would be Assume the following activities occurred in Februa Razors Slims Eagles 3,000 $8,000 300 2,000 55,000 1,000 $4,000 100 200 Number of Units Produced. Direct Materials Costs... Direct Labor Hours Number of Production Runs Number of Orders ... Pounds of Material Used.. Machine Hours Number of Inspections ...... Units Shipped. Direct labor costs are $20 per hour.... 400 20 3,000 $6,000 2.000 $4,000 20 1,000 $2,000 We have solutions for your book! Problem 40PSC: Chapter 03 Problem: 40PS ABC and predetermined overhead rates. Assume that SunSpecs Corporation makes three types of sunglasses, Razors, Slims, and Eagles, major retailers such as Ray-Ban and Gucci. SunSpecs presently applies overhead using a predetermined rate based on direct labor hours. A consultant recommended that SunSpecs switch to activity-based costing Management decided to give ABC a try and identified the following activities, cost drivers, and estimated costs for Year 2 for each activity center R uststest Hand Pounds of t e P The company estimated 10,000 labor hours would be worked in all of Y 2. Assume the following activities occurred in February of Year 2: of wisdeed. a. Compute an overhead allocation rate for each of the cost drivers recommended by the consultant and for direct labor. b. Compute the production costs for each product for February using the cost drivers recommended by the consultant C. Compute the production costs for each product for February using dir labor hours as the overhead allocation base. d. Management has seen your numbers and wants to know how you account for the discrepancy between the product costs using only direct ours as the overhead allocation base and the product costs using activity-based costing. Write a briefresponse to management. Estimated Activity Recommended Cost Driver Annual Costs Annual Cost Driver Units Production Setup Order Processing Materials Handling Equipment Depreciation and Maintenance Quality Management Packing and Shipping Total Estimated Overhead ...... Number of Production Runs Number of Orders Pounds of Materials Used Machine Hours Number of Inspections Number of Units Shipped 560,000 100,000 40,000 120,000 100,000 80,000 $500,000 200 400 16,000 20,000 800 80,000 he company estimated 10,000 labor hours would be Assume the following activities occurred in Februa Razors Slims Eagles 3,000 $8,000 300 2,000 55,000 1,000 $4,000 100 200 Number of Units Produced. Direct Materials Costs... Direct Labor Hours Number of Production Runs Number of Orders ... Pounds of Material Used.. Machine Hours Number of Inspections ...... Units Shipped. Direct labor costs are $20 per hour.... 400 20 3,000 $6,000 2.000 $4,000 20 1,000 $2,000