Jordan Company currently is using a plant-wide factory overheadrate based on machine hours. The budgeted factory overhead costs is$405,000. Company has two departments, X and Y. Company isconsidering use of departmental overhead rates for the allocationof each departmentsâ overhead costs to jobs. Overhead would beapplied based on direct labor cost in Department X andmachine-hours in Department Y. The following additional informationis available:
BudgetedAmounts DepartmentX Department Y
Direct laborcost $180,000 $165,000
Factoryoverhead $225,000 $180,000
Machine-hours 51,000mh 40,000 mh
Actual data for Job#10 DepartmentX Department Y
Direct materialsrequisitioned $10,000 $16,000
Direct laborcost $11,000 $14,000
Machine-hours 5,000mh 3,000 mh
1. Compute total costof manufacturing Job 10 under current system (using plant-widerate).
2. Compute total costof manufacturing Job 10 using departmental overhead rates.
Jordan Company currently is using a plant-wide factory overheadrate based on machine hours. The budgeted factory overhead costs is$405,000. Company has two departments, X and Y. Company isconsidering use of departmental overhead rates for the allocationof each departmentsâ overhead costs to jobs. Overhead would beapplied based on direct labor cost in Department X andmachine-hours in Department Y. The following additional informationis available:
BudgetedAmounts DepartmentX Department Y
Direct laborcost $180,000 $165,000
Factoryoverhead $225,000 $180,000
Machine-hours 51,000mh 40,000 mh
Actual data for Job#10 DepartmentX Department Y
Direct materialsrequisitioned $10,000 $16,000
Direct laborcost $11,000 $14,000
Machine-hours 5,000mh 3,000 mh
1. Compute total costof manufacturing Job 10 under current system (using plant-widerate).
2. Compute total costof manufacturing Job 10 using departmental overhead rates.
Related questions
Stewart Marketing Inc. manufactures two products, A andB. Presently, the company uses a single plant-wide factory overheadrate for allocating overhead to products. However, management isconsidering moving to a multiple department rate system forallocating overhead. From the following information, using a singleplant-wide rate, determine the overhead rate per unit for ProductA:
|
|
| ||
A | B | |||
| Painting Dept. | $248,000 | 10,000 dlh | 16 dlh | 4 dlh |
| Finishing Dept. | 72,000 | 10,000 | 4 | 16 |
| Totals | $320,000 | 20,000 dlh | 20 dlh | 20 dlh |
======== | ========== | ====== | ====== | |
| $496.00 per unit |
| $320.00 per unit |
| $144.00 per unit |
| $640.00 per unit |
Stewart Marketing Inc. manufactures two products, A andB. Presently, the company uses a single plant-wide factory overheadrate for allocating overhead to products. However, management isconsidering moving to a multiple department rate system forallocating overhead. From the following information, using a singleplant-wide rate, determine the overhead rate per unit for ProductB:
| Overhead | Direct Labor Hours (dlh) | Product | ||
| A | B | |||
| Painting Dept. | $248,000 | 10,000 dlh | 16 dlh | 4 dlh |
| Finishing Dept. | 72,000 | 10,000 | 4 | 16 |
| Totals | $320,000 | 20,000 dlh | 20 dlh | 20 dlh |
| ======== | ========== | ====== | ====== | |
| $320.00 |
| $496.00 |
| $144.00 |
| $640.00 |
The single plantwide factory overhead rate is $52 perdirect labor hour. The company implements activity-based costingusing four different activity bases, including direct labor hours(and three others). What can be said about the direct labor rateunder activity-based costing relative to the single plantwiderate?
| The direct labor rate under activity-based costing will beequal to $52 per direct labor hour. |
| The direct labor rate under activity-based costing cannot becompared meaningfully to the $52 per direct labor hour rate. |
| The direct labor rate under activity-based costing must be lessthan $52 per direct labor hour. |
| The direct labor rate under activity-based costing must begreater than $52 per direct labor hour. |
The Nite Lite Factory produces two products - smalllamps and desk lamps. It has two separate departments - finishingand production. The overhead budget for the finishing department is$550,000, using 500,000 direct labor hours. The overhead budget forthe production department is $400,000 using 80,000 direct laborhours. If the budget estimates that a desk lamp will require 1hours of finishing and 2 hours of production, how much factoryoverhead will be allocated to each unit of desk lamps using themultiple production department factory overhead rate method with anallocation base of direct labor hours?
| $11.10 |
| $10.00 |
| $4.91 |
| $5.00 |
The Delph Company produces two products, Blinks andDinks. They are manufactured in two departments, Fabrication andassembly. Data for the products and departments are listedbelow.
| Product | Number of units | Labor hrs per unit | Machine hours per unit |
| Blinks | 1,000 | 4 | 5 |
| Dinks | 2,000 | 2 | 8 |
All of the Machine hours take place in the Fabricationdepartment, which has an estimated overhead of $84,000. All of thelabor hours take place in the Assembly department, which has anestimated total overhead of $72,000.
The Delph Company usesa departmental overheadrates. The fabrication department uses machinehours for an allocation base, and the assembly department useslabor hours. What is the overhead cost per unit forDinks?
| $64 |
| $44 |
| $56 |
| $50 |
HI, I just have a simple or dum question. I am currently takingmanagerial accounting and we are learning the direct and stright-method of predetermined overhead rates. I found an example onlinebut for the DIRECT METHHOD I am not able to figureout where theratios are coming from and what they mean. I would greatlyappreciate the help. Thank You - Maria R.
I just need help with the Direct method question. I need to knowhow to get ratios.
1.
value:
50.00 points
Problem 4B-6 Step-Down Method versus Direct Method;Predetermined Overhead Rates [LO4-10, LO4-11]
The Sendai Co., Ltd., of Japan has budgeted costs in its variousdepartments as follows for the coming year: |
| FactoryAdministration | $ | 480,760 |
| CustodialServices | 116,260 | |
| Personnel | 45,602 | |
| Maintenance | 141,258 | |
| Machiningâoverhead | 874,528 | |
| Assemblyâoverhead | 1,181,192 | |
| Total cost | $ | 2,839,600 |
| The companyallocates service department costs to other departments in theorder listed below. |
| Department | Numberof Employees | Total Labor- Hours | Square Feet of Space Occupied | Direct Labor- Hours | Machine- Hours |
| FactoryAdministration | 27 | â | 8,600 | â | â |
| CustodialServices | 11 | 11,600 | 3,600 | â | â |
| Personnel | 18 | 16,700 | 8,600 | â | â |
| Maintenance | 54 | 44,500 | 16,000 | â | â |
| Machining | 64 | 60,000 | 60,000 | 112,000 | 180,000 |
| Assembly | 96 | 150,000 | 20,000 | 227,000 | 36,000 |
| 270 | 282,800 | 116,800 | 339,000 | 216,000 | |
Machining and Assembly are operating departments; the otherdepartments are service departments. Factory Administration isallocated on the basis of labor-hours; Custodial Services on thebasis of square feet occupied; Personnel on the basis of number ofemployees; and Maintenance on the basis of machine-hours. |
| Required: |
| 1. | Allocate service department costs to consuming departments bythe step-down method. Then compute predetermined overhead rates inthe operating departments using a machine-hours basis in Machiningand a direct labor-hours basis in Assembly. (Please enterallocations from a department as negative and allocations to adepartment as positive. The line should add across to zero. Do notround intermediate calculations. Round "Predetermined overheadrates" to 2 decimal places and other answers to the nearest wholedollar amount.) |
| 2. | Allocate service department costs to consuming departments bythe direct method. Again, compute predetermined overhead rates inMachining and Assembly. (Please enter allocations from adepartment as negative and allocations to a department as positive.The line should add across to zero. Do not round intermediatecalculations. Round "Predetermined overhead rates" to 2 decimalplaces and other answers to the nearest whole dollaramount.) |
| 3. | Assume that the company doesnât bother with allocating servicedepartment costs but simply computes a single plantwide overheadrate based on total overhead costs (both service department andoperating department costs) divided by total direct labor-hours.Compute the plantwide overhead rate. (Round your answer to2 decimal places.) |
| 4. | Suppose a job requires machineand labor time as follows: |
| Machine-Hours | Direct Labor-Hours | |
| MachiningDepartment | 290 | 28 |
| AssemblyDepartment | 15 | 84 |
| Total hours | 305 | 112 |
Compute the amount of overhead cost that would be assigned tothe job if the overhead rates were developed using the stepdownmethod, the direct method, and the plantwide method. (Roundintermediate calculations to 2 decimal places and finalcalculations to the nearest whole dollar.) |
