AC 212 Quiz: Test 2 Review

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goldhornet207

30 Oct 2016

School

Quinnipiac University

Department

Accounting

Course

AC 212

Professor

Katherine Simione

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Document Summary

Rate = cost/allocation base (rate)(actual volume) = overhead allocated. What was the total cost of a job if departmental overhead rates were used to allocate. Step 1) the company estimates the total manufacturing overhead costs that will be incurred in each department in the coming year (known as departmental overhead cost pools). Step 2) the company selects an allocation base for each department and estimates the total amount that will be used during the year. Step 3) the company calculates its departmental overhead rates using the information estimated in step 1 and step 2. (step 1 divided by step 2 = Step 4) the company allocates some manufacturing overhead from each. Compute allocation rates for activities department to the individual jobs that use those departments. (step 3 (departmental rate) x actual activity in department) (cid:1844)(cid:1853)(cid:1872)(cid:1857) (cid:1827)(cid:1855)(cid:1872)(cid:1873)(cid:1853)(cid:1864) (cid:1827)(cid:1864)(cid:1864)(cid:1867)(cid:1855)(cid:1853)(cid:1872)(cid:1867)(cid:1866) (cid:1828)(cid:1853)(cid:1871)(cid:1857) (cid:1847)(cid:1871)(cid:1857)(cid:1856)=(cid:1827)(cid:1864)(cid:1864)(cid:1867)(cid:1855)(cid:1853)(cid:1872)(cid:1857)(cid:1856) Compute total manufacturing overhead costs using activity-based costing.

Related Questions

Jordan Company currently is using a plant-wide factory overheadrate based on machine hours. The budgeted factory overhead costs is$405,000. Company has two departments, X and Y. Company isconsidering use of departmental overhead rates for the allocationof each departmentsâ overhead costs to jobs. Overhead would beapplied based on direct labor cost in Department X andmachine-hours in Department Y. The following additional informationis available:

BudgetedAmounts DepartmentX Department Y

Direct laborcost $180,000 $165,000

Factoryoverhead $225,000 $180,000

Machine-hours 51,000mh 40,000 mh

Actual data for Job#10 DepartmentX Department Y

Direct materialsrequisitioned $10,000 $16,000

Direct laborcost $11,000 $14,000

Machine-hours 5,000mh 3,000 mh

1. Compute total costof manufacturing Job 10 under current system (using plant-widerate).

2. Compute total costof manufacturing Job 10 using departmental overhead rates.

greycheetah389

Heroux Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:

	Forming		Customizing		Total
Estimated total machine-hours (MHs)		3,000		7,000		10,000
Estimated total fixed manufacturing overhead cost	$	16,500	$	20,300	$	36,800
Estimated variable manufacturing overhead cost per MH	$	1.70	$	2.50

During the most recent month, the company started and completed two jobs--Job A and Job H. There were no beginning inventories. Data concerning those two jobs follow:

	Job A		Job H
Direct materials	$	12,800	$	6,700
Direct labor cost	$	24,300	$	7,800
Forming machine-hours		2,000		1,000
Customizing machine-hours		2,800		4,200

Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. The manufacturing overhead applied to Job A is closest to: (Round your intermediate calculations to 2 decimal places.)

turquoiseherring234

Ramsey Company produces speakers (Model A and Model B).Ramseyâs controller, Mr. Jacks, is evaluating the different methodsof allocating manufacturing overhead to the products. Both productspass through two producing departments. Model Aâs production ismuch more labor-intensive than that of Model B. Model B is alsomore popular of the two speakers. The following data have beengathered for the two products.

		Product Data
		Model A	Model B
Units produced & sold per year		20,000	200,000
Sales Revenue		$600,000.00	$6,000,000.00
Prime cost		$100,000.00	$1,000,000.00
Direct Labor Hours		140,000	300,000
Machine hours		20,000	180,000
Set Ups		40	160
Inspection runs		600	1,400
Packing Orders		9,000	81,000
Estimated Manufacturing Overhead:
Machining costs	$160,000.00
Setup costs	$180,000.00
Inspection costs	$140,000.00
Packing costs	$180,000.00
Total Manufacturing Overhead	$660,000.00

Suppose that Ramsey decides to use departmental overhead rates.There are two departments: Department 1 (machine intensive) with anMOH rate of $2.75 per machine hour and Department 2 (laborintensive) with an MOH rate of $1.25 per direct labor hour. Theactual consumption of these two drivers is as follows:

	Department 1	Department 2
	Machine Hours	Direct Labor Hours
Model A	55,000	110,000
Model B	145,000	330,000

Compare the results for the simple cost allocation system(plant-wide), departmental cost allocation and the ABC costallocation systems. Which do you think is more accurate and why? What circumstances would favor Ramseyadopting ABC as their allocation method (provide at least threereasons)?

AC 212 Quiz: Test 2 Review

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