Next year, Pine Corp. expects to spend a total of 198,250 direct labor hours producing four models of widget, while Spruce Inc. expects to spend a total of 172,050 hours producing three models. Both firms allocate overhead on the basis of direct labor hours. If Pine anticipates a total overhead of $1.2 million and Spruce anticipates a total overhead of $1.1 million, then (Pine/Spruce) has a higher predetermined ove

Next year, Pine Corp. expects to spend a total of 198,250 direct labor hours producing four models of widget, while Spruce Inc. expects to spend a total of 172,050 hours producing three models. Both firms allocate overhead on the basis of direct labor hours. If Pine anticipates a total overhead of $1.2 million and Spruce anticipates a total overhead of $1.1 million, then (Pine/Spruce) has a higher predetermined ove

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 1PA: Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the...

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Bobcat uses a traditional cost system and estimates next years overhead will be $800.000, as driven by the estimated 25,000 direct labor hours. It manufactures three products and estimates the following costs: If the labor rate is $30 per hour, what is the per-unit cost of each product?
If a factory operates at 100% of capacity one month, 90% of capacity the next month, and 105% of capacity the next month, will a different cost per unit be charged to the work-in-process account each month for factory overhead assuming that a predetermined annual overhead rate is used?
Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $25 per unit and $40 s used in direct labor, while the direct material for the double is $40 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 9,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
Pyramid Company expects to incur $3,000,000 in manufacturing overhead costs this year. During the year, it expects to use 40,000 direct labor hours at a cost of $600,000 and 80,000 machine hours. Required: a. Prepare a predetermined overhead rate based on direct labor hours, direct labor cost, and machine hours. b. Why might Pyramid Company prefer to use machine hours to allocate manufacturing overhead? c. Using each of the predetermined overhead rates calculated in part a and the data that follows for job 128, determine the cost of job 128
Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 36,000 units next year and Product L is expected to sell 7,200 units. A unit of either product requires 0.9 direct labor-hours. The company's total manufacturing overhead for the year is expected to be $3,304,800. What is the overhead cost per unit for Product L if the overhead cost per unit for Product H is $45.90
Al-Can Products, Inc. estimates that it will build 5,000 benches next year. For this amount of production, total factory overhead is estimated to be $123,456.00. Estimated direct labor costs for next year are $256,190.00. Calculate the factory overhead applied rate for next year as a percentage of direct labor costs.
K Company estimates that overhead costs for the next year will be $5,125,000 for indirect labor and $1,050,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 130,000 direct labor hours are planned for this next year, what is the company's plantwide overhead rate? $0.25 per direct labor hour. O $47.50 per direct labor hour. O $39.42 per direct labor hour. O $8.08 per direct labor hour. O $0.12 per direct labor hour.
Cogswell Cogs, Inc. estimates its overhead for the upcoming year to be $1,693,500 and will use machine hours as its base to apply overhead and estimates total machine usage will be 112,000 hours and estimates direct labor hours will be 43,500 hours. Cogswell makes three different models of its product – Basic, Premium and Deluxe. The company anticipates making 10,000 units of Basic, 5,000 units of Premium and 1,000 units of Deluxe. The following information relates to Direct Material and Direct Labor for each unit for each model – Basic Direct Material Direct Labor 5 pounds @ $4/pound 2.5 hours @ $16/hour Premium 8 pounds @ $4.20/pound 3 hours @ $16/hour Deluxe 10 pounds @ $440/pd 3.5 hours @ $18/hour Overhead 6 machine hours 8 machine hours 12 machine hours Mr. Cogswell, the President and CEO of Cogswell Cogs, Inc. has been reading about Activity-based Costing (ABC) and thinks that perhaps the company should adopt it. He asked you to gather up information regarding the cost drivers in…
The management of Red Star Company estimates that 60,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $5 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?
Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 40,000 units next year and Product L is expected to sell 8,000 units. A unit of either product requires 0.4 direct labor-hours. The company's total manufacturing overhead for the year is expected to be $1,632,000. Required: 1. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method is followed, how much overhead cost would be applied to each product? Compute both the overhead cost per unit and the total amount of overhead cost that would be applied to each product. (In other words, how much overhead cost is applied to a unit of Product H? Product L? How much overhead cost is applied in total to all the units of Product H? Product L?) 2. Management is considering an activity-based costing system and would like to know what impact this change might have on product costs. For purposes of discussion, it…
Concord Co. estimates that it will incur $857500 of overhead costs each year in its three main departments, machining ($490000). inspections ($245000) and packing ($122500). The machining department works 4000 hours per year, there are 600 inspections per year, and the packing department packs 1000 orders per year. Information about Concord's two products and their estimated use of cost drivers is as follows: Machining hours Inspections Orders packed Direct labor hours Product X 1000 $296827 O $416500 100 350 1700 Product Y 3000 500 650 1800 If traditional costing based on direct labor hours is used, how much overhead will be assigned to Product X?
The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: Units to be produced Each unit requires 0.25 direct labor-hours and direct laborers are paid $14.00 per hour. In addition, the variable manufacturing overhead rate is $1.60 per direct labor-hour. The fixed manufacturing overhead is $95,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $35,000 per quarter. Required: 1. Calculate the company's total estimated direct labor cost for each quarter of the upcoming fiscal year and for the year as a whole. 2. and 3. Calculate the company's total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the upcoming fiscal year and for the year as a whole. 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 11,500 10,500 12,500 13,500 Complete this question by entering your answers in the tabs below. Req 1…