OVERHEAD RATES, UNIT COSTS Xanning Company manufactures specialty tools to customer order. There are three pro- ducing departments. Departmental information on budgeted overhead and various ac- vity measures for the coming year is as follows: Estimated overhead Direct labour hours Direct labour cost Machine hours Welding $200,000 4,500 $90,000 5,000 Direct materials Direct labour cost Direct labour hours: Assembly $22,000 10,000 $150,000 1,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worth- while to use departmental overhead rates. She has analyzed the overhead costs and driv- ers for the various departments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate an direct labour hours. Janine has been asked to prepare bids for two jobs with the following information: Job 1 Job 2 $4,500 $8,600 $1,000 $2,000 Welding Assembly Finishing Number of machine hours: 10 60 30 Finishing $250,000 6,000 $120,000 2,000 50 40 110 20 20 80 30 Welding 5 Assembly Finishing 165 The typical bid price includes a 30 percent markup over full manufacturing cost. Required: 1 Calculate a plantwide rate for Xanning Company based on machine hours. What is the bid price of each job using this rate? Calculate departmental overhead rates for the producing departments. What is the bid price of each job using these rates? (Round all answers to the nearest dollar.)
OVERHEAD RATES, UNIT COSTS Xanning Company manufactures specialty tools to customer order. There are three pro- ducing departments. Departmental information on budgeted overhead and various ac- vity measures for the coming year is as follows: Estimated overhead Direct labour hours Direct labour cost Machine hours Welding $200,000 4,500 $90,000 5,000 Direct materials Direct labour cost Direct labour hours: Assembly $22,000 10,000 $150,000 1,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worth- while to use departmental overhead rates. She has analyzed the overhead costs and driv- ers for the various departments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate an direct labour hours. Janine has been asked to prepare bids for two jobs with the following information: Job 1 Job 2 $4,500 $8,600 $1,000 $2,000 Welding Assembly Finishing Number of machine hours: 10 60 30 Finishing $250,000 6,000 $120,000 2,000 50 40 110 20 20 80 30 Welding 5 Assembly Finishing 165 The typical bid price includes a 30 percent markup over full manufacturing cost. Required: 1 Calculate a plantwide rate for Xanning Company based on machine hours. What is the bid price of each job using this rate? Calculate departmental overhead rates for the producing departments. What is the bid price of each job using these rates? (Round all answers to the nearest dollar.)
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter4: Job-order Costing And Overhead Application
Section: Chapter Questions
Problem 57P: Overhead Rates, Unit Costs Folsom Company manufactures specialty tools to customer order. There are...
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