Reference no: EM13919044
X Company produces many different products within the same manufacturing plant. It currently uses a single driver, plantwide allocation system to allocate its overhead, with direct labor hours as the most appropriate cost driver. Estimated direct labor hours for 2015 are 90,000; estimated overhead is $168,000.
Assume the following information for one of its products, Product 1, in 2015:
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Direct materials
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$67,600
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Direct labor
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$15,552
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Direct labor hours
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972
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Machine hours
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1,850
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3. Using the single driver system, allocate overhead to Product 1 (round overhead rate(s) to two decimal places).
Question 4 Assume that X Company has decided to switch to a departmental allocation system. It has two departments, and will use direct labor hours as the cost driver in Department 1 and machine hours as the cost driver in Department 2. The following are budgeted costs and driver amounts for these two departments in 2015:
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Department 1
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Department 2
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Overhead
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$110,000
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$58,000
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Direct labor
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$640,000
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$800,000
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Direct labor hours
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40,000
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50,000
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Machine hours
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110,000
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140,000
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Assume the following information for Product 1 in 2015:
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Department 1
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Department 2
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Direct labor
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$12,176
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$3,376
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Direct labor hours
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761
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211
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Machine hours
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1,030
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820
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4. Using the departmental system, allocate overhead to Product 1 (round overhead rate(s) to two decimal places).
Question 5 Assume that X Company has decided to switch to an activity-based costing allocation system. It has identified three activities with the following budgeted costs and cost drivers for 2015:
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Activity
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Budgeted cost
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Cost driver
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Purchasing
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$33,600
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4,600 purchase orders
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Assembly
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$84,000
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89,200 parts
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Packaging
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$50,400
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11,500 finished units
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5. Assume that 569 unis of Product 1 were finished in 2015, requiring 1,274 parts and 42 purchase orders. Using the activity-based costing system, allocate overhead to Product 1 (round overhead rate(s) to two decimal places).
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