Sounds Fine, Inc. manufactures two models of stereo speakers. Cost estimates for the two models for the coming year are as follows: Direct material Direct labor (10 hours at $22 per hour) Manufacturing overhead* Total cost Basic Model $ 220 220 140 $580 Advanced Model $ 370 220 140 $ 730 *The predetermined overhead rate is $14 per direct-labor hour. Each stereo speaker requires 10 hours of direct labor. Each Basic Model unit requires three hours in Department I and seven hours in Department II. Each unit of the Advanced Model requires seven hours in Department I and three hours in Department II. The manufacturing overhead costs expected during the coming year in Departments I and II are as follows: Variable overhead Fixed overhead Department I $12 per direct-labor hour $180,000 Department II $6 per direct-labor hour $180,000 The expected operating activity for the coming year is 36,000 direct-labor hours in each department Required: 1. Calculate the total budgeted overhead cost and total expected direct-labor hours for both departments together. Compute the predetermined overhead rate per direct-labor hour. 2. What will be the price of each model stereo speaker if the company prices its products at absorption manufacturing cost plus 20 percent? 3. Suppose Sounds Fine, Inc. were to use departmental overhead rates. Compute these rates for Departments I and II for the coming year. 4. Compute the absorption cost of each model stereo speaker using the departmental overhead rates computed in requirement (3). 5. Suppose management sticks with its policy of setting prices equal to absorption cost plus 20 percent. Compute the new price for each speaker model using the product costs developed in requirement (4). 6. Should Sounds Fine, Inc. use plantwide or departmental overhead rates? Answer is not complete. Complete this question by entering vour answers in the tabs below The expected operating activity for the coming year is 36,000 direct-labor hours in each department. Required: 1. Calculate the total budgeted overhead cost and total expected direct-labor hours for both departments together. Compute the predetermined overhead rate per direct-labor hour. 2. What will be the price of each model stereo speaker if the company prices its products at absorption manufacturing cost plus 20 percent? 3. Suppose Sounds Fine, Inc. were to use departmental overhead rates. Compute these rates for Departments I and II for the coming year. 4. Compute the absorption cost of each model stereo speaker using the departmental overhead rates computed in requirement (3). 5. Suppose management sticks with its policy of setting prices equal to absorption cost plus 20 percent. Compute the new price for each speaker model using the product costs developed in requirement (4). 6. Should Sounds Fine, Inc. use plantwide or departmental overhead rates? X Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Req3 Reg 4 Reg 5 Req 6 Suppose Sounds Fine, Inc. were to use departmental overhead rates. Compute these rates for Departments I and II for the coming year. $ Department 1 Department 11 Overhead rates per direct-labor 8 X hour 5 per direct-labor $ hour The expected operating activity for the coming year is 36,000 direct-labor hours in each department. Required: 1. Calculate the total budgeted overhead cost and total expected direct-labor hours for both departments together. Compute the predetermined overhead rate per direct-labor hour. 2. What will be the price of each model stereo speaker if the company prices its products at absorption manufacturing cost plus 20 percent? 3. Suppose Sounds Fine, Inc. were to use departmental overhead rates. Compute these rates for Departments I and II for the coming year. 4. Compute the absorption cost of each model stereo speaker using the departmental overhead rates computed in requirement (3). 5. Suppose management sticks with its policy of setting prices equal to absorption cost plus 20 percent. Compute the new price for each speaker model using the product costs developed in requirement (4). 6. Should Sounds Fine, Inc. use plantwide or departmental overhead rates? X Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Reg 3 Req 4 Req 5 Req 6 Compute the absorption cost of each model stereo speaker using the departmental overhead rates computed in requirement (3). Absorption cost Basic model Advanced model The expected operating activity for the coming year is 36,000 direct-labor hours in each department. Required: 1. Calculate the total budgeted overhead cost and total expected direct-labor hours for both departments together. Compute the predetermined overhead rate per direct-labor hour. 2. What will be the price of each model stereo speaker if the company prices its products at absorption manufacturing cost plus 20 percent? 3. Suppose Sounds Fine, Inc. were to use departmental overhead rates. Compute these rates for Departments I and II for the coming year. 4. Compute the absorption cost of each model stereo speaker using the departmental overhead rates computed in requirement (3). 5. Suppose management sticks with its policy of setting prices equal to absorption cost plus 20 percent. Compute the new price for each speaker model using the product costs developed in requirement (4). 6. Should Sounds Fine, Inc. use plantwide or departmental overhead rates? X Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Req 3 Req 4 Req 5 Req 6 Suppose management sticks with its policy of setting prices equal to absorption cost plus 20 percent. Compute the new price for each speaker model using the product costs developed in requirement (4). (Do not round intermediate calculations. Round your final answers to 2 decimal places.) New price Basic model Advanced model Variable overhead Fixed overhead $12 per direct-labor hour $180,000 $6 per direct-labor hour $180,000 The expected operating activity for the coming year is 36,000 direct-labor hours in each department. Required: 1. Calculate the total budgeted overhead cost and total expected direct-labor hours for both departments together. Compute the predetermined overhead rate per direct-labor hour. 2. What will be the price of each model stereo speaker if the company prices its products at absorption manufacturing cost plus 20 percent? 3. Suppose Sounds Fine, Inc. were to use departmental overhead rates. Compute these rates for Departments I and II for the coming year. 4. Compute the absorption cost of each model stereo speaker using the departmental overhead rates computed in requirement (3). 5. Suppose management sticks with its policy of setting prices equal to absorption cost plus 20 percent. Compute the new price for each speaker model using the product costs developed in requirement (4). 6. Should Sounds Fine, Inc. use plantwide or departmental overhead rates? Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 2 Req3 Reg 4 Req 5 Reg 6 Should Sounds Fine, Inc. use plantwide or departmental overhead rates? Should Sounds Fine, Inc. use plantwide or departmental overhead rates?
