Reference no: EM133067857
Question - Speed Demon Inc. manufactures two products: speedometers and odometers. During the month, it produced 2,000 speedometers and 3,000 odometers and incurred estimated overhead costs of $45,300. This month, the company incurred the following:
|
|
Speedometers
|
Odometers
|
|
Machine Hours
|
750
|
1,000
|
|
Labour Hours
|
1,200
|
800
|
|
Labor Cost
|
$12,000
|
$18,000
|
Management is considering implementing activity-based costing. An analysis of estimated overhead costs reveals the following activities:
|
Activity
|
Overhead Cost
|
Allocation Base
|
Expected Activity
|
|
Speedometers
|
Odometers
|
|
Materials Handling
|
$18,000
|
# of requisitions
|
400
|
600
|
|
Machine Set-Ups
|
$12,600
|
# of set-ups
|
150
|
300
|
|
Inspections
|
$14,700
|
# of inspections
|
200
|
400
|
The company currently allocates overhead based on direct labor hours.
Required -
1) Compute the predetermined overhead rate using machine hours as the basis for allocating overhead costs to products.
2) What is the total overhead allocated to odometers using the current(direct labor hours) costing system?
3) What is the per unit cost of odometers using the current (direct labor hours) costing system? Round answer to two decimal places.
4) Compute the activity rate for each of the activity cost pools.
5) What is the total overhead allocated to odometers using activity-based costing?