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sells a high-speed retrieval system for mining information
sells a high-speed retrieval system for mining information. It provides the following information for the year. Overhead cost Machine hours Direct labor hours Budgeted Actual $1,281,000 $1,256,000 58,400 48,100 105,000 99.900 Overhead is applied on the basis of direct labor hours. (a) Compute the predetermined overhead rate. (Round answer to 2 decimal places, eg. 12.25.) Predetermined overhead rate $ per direct labor hour eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer Ihl
Weisman, Inc. uses activity-based costing as the basis for information to set prices for its six lines of seasonal coats. Activity Cost Pools Designing Sizing and cutting Stitching and trimming Wrapping and packing Estimated Overhead $438,725 4.128,000 1.419,000 323,750 Estimated Use of Cost Drivers per Activity 11,500 designer hours 160,000 machine hours 82,500 labor hours 35,000 finished units Compute the activity-based overhead rates using the following budgeted data for each of the activity cost pools. (Round answers to 2 decimal places, eg. 12.25.) Designing Sizing and cutting Stitching and trimming Wrapping and packing $ $ $ Activity-based overhead rates per designer hour per machine hour per labor hour per finished unit $ eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
Expert Solution
Solution: (a) Predetermined overhead rate = Budgeted Overhead / Budgeted direct labor hours
= $1,281,000 / 105,000 labor hours
= $12.20 per direct labor hour
(b) Calculation of activity base overhead rates
| Designing | Budgeted overhead / Designer hours | $438,725 / 11,500 designer hours | $38.15 per designer hour |
| Sizing and cutting | Budgeted overhead / Machine hours | $4,128,000 / 160,000 machine hours | $25.80 per machine hour |
| Stitching and trimming | Budgeted overhead / Labor Hours | $1,419,000 / 82,500 labor hours | $17.20 per labor hour |
| Wrapping and Packing | Budgeted overhead / Finished units | $323,750 / 35,000 finished units | $9.25 per finished unit |
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