Activity Allocation Base Predetermined Overhead Allocation Rate Materials handling Number of parts $8.00 per part Machine setup Number of setups 800.00 per setup Insertion of parts Number of parts 28.00 per part Finishing Number of finishing hours 60.00 per hour Standard Deluxe Parts per rim 8.0 9.0 Setups per 500 rims 12.0 12.0 Finishing hours per rim 2.0 4.5 Total direct labor hours per rim 6.0 9.0 Company manufactures wheel rims. The controller expects the following ABC allocation rates for 2024: LOADING... (Click the icon to view the allocation rates.) Elkin produces two wheel rim models: standard and deluxe. Expected data for 2024 Part 1 The company expects to produce 500 units of each model during the year. Requirement 1. Compute the total estimated indirect manufacturing cost for 2024. Begin by selecting the formula to compute the total estimated overhead (OH) costs. Total estimated × = overhead costs Part 2 Now compute the total estimated indirect manufacturing cost for 2024. Total Estimated Activity Indirect Manufacturing Cost Materials handling Machine setup Insertion of parts Finishing Total estimated indirect manufacturing cost Part 3 Requirement 2. Prior to 2024, Elkin used a single plantwide overhead allocation rate system with direct labor hours as the allocation base. Compute the predetermined overhead allocation rate based on direct labor hours for 2024. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model, to the nearest cent. First, select the formula, and then enter the amounts to compute the allocation rate. ÷ = Allocation rate ÷ = Part 4 Use the single plantwide allocation rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent. Indirect manufacturing cost per rim: Standard model: Deluxe model: Part 5 Requirement 3. Compute the estimated ABC indirect manufacturing cost per unit of each model for 2024. Carry each cost per unit to the nearest cent. Compute the costs per unit for the standard model first, then the deluxe model. (Carry the setup cost per rim to three decimal places. Round your final answers to the nearest cent.) Allocated Mfg. Activity OH Cost Per Rim Standard Materials handling Machine setup Insertion of parts Finishing Total indirect cost per rim Allocated Mfg. OH Cost Per Rim Deluxe

Activity Allocation Base Predetermined Overhead Allocation Rate Materials handling Number of parts $8.00 per part Machine setup Number of setups 800.00 per setup Insertion of parts Number of parts 28.00 per part Finishing Number of finishing hours 60.00 per hour Standard Deluxe Parts per rim 8.0 9.0 Setups per 500 rims 12.0 12.0 Finishing hours per rim 2.0 4.5 Total direct labor hours per rim 6.0 9.0 Company manufactures wheel rims. The controller expects the following ABC allocation rates for 2024: LOADING... (Click the icon to view the allocation rates.) Elkin produces two wheel rim models: standard and deluxe. Expected data for 2024 Part 1 The company expects to produce 500 units of each model during the year. Requirement 1. Compute the total estimated indirect manufacturing cost for 2024. Begin by selecting the formula to compute the total estimated overhead (OH) costs. Total estimated × = overhead costs Part 2 Now compute the total estimated indirect manufacturing cost for 2024. Total Estimated Activity Indirect Manufacturing Cost Materials handling Machine setup Insertion of parts Finishing Total estimated indirect manufacturing cost Part 3 Requirement 2. Prior to 2024, Elkin used a single plantwide overhead allocation rate system with direct labor hours as the allocation base. Compute the predetermined overhead allocation rate based on direct labor hours for 2024. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model, to the nearest cent. First, select the formula, and then enter the amounts to compute the allocation rate. ÷ = Allocation rate ÷ = Part 4 Use the single plantwide allocation rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent. Indirect manufacturing cost per rim: Standard model: Deluxe model: Part 5 Requirement 3. Compute the estimated ABC indirect manufacturing cost per unit of each model for 2024. Carry each cost per unit to the nearest cent. Compute the costs per unit for the standard model first, then the deluxe model. (Carry the setup cost per rim to three decimal places. Round your final answers to the nearest cent.) Allocated Mfg. Activity OH Cost Per Rim Standard Materials handling Machine setup Insertion of parts Finishing Total indirect cost per rim Allocated Mfg. OH Cost Per Rim Deluxe

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 4MCQ: The predetermined overhead rate equals a. actual overhead divided by actual activity level for a...

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Activity	Allocation Base	Predetermined Overhead Allocation Rate
Materials handling	Number of parts	$8.00 per part
Machine setup	Number of setups	800.00 per setup
Insertion of parts	Number of parts	28.00 per part
Finishing	Number of finishing hours	60.00 per hour

	Standard	Deluxe
Parts per rim	8.0	9.0
Setups per 500 rims	12.0	12.0
Finishing hours per rim	2.0	4.5
Total direct labor hours per rim	6.0	9.0

Part 2

Now compute the total estimated indirect manufacturing cost for

2024.

		Total Estimated
Activity		Indirect Manufacturing Cost
Materials handling
Machine setup
Insertion of parts
Finishing
Total estimated indirect manufacturing cost

Part 3

Requirement 2. Prior to

2024,

Elkin

used a single plantwide overhead allocation rate system with direct labor hours as the allocation base. Compute the predetermined overhead allocation rate based on direct labor hours for

2024.

Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model, to the nearest cent.

First, select the formula, and then enter the amounts to compute the allocation rate.

		÷		=	Allocation rate
		÷		=

Part 4

Use the single plantwide allocation rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent.

Indirect manufacturing cost per rim:
Standard model:
Deluxe model:

Part 5

Requirement 3. Compute the estimated ABC indirect manufacturing cost per unit of each model for

2024.

Carry each cost per unit to the nearest cent.

Compute the costs per unit for the standard model first, then the deluxe model. (Carry the setup cost per rim to three decimal places. Round your final answers to the nearest cent.)

		Allocated Mfg.
Activity		OH Cost Per Rim
		Standard
Materials handling
Machine setup
Insertion of parts
Finishing
Total indirect cost per rim

	Allocated Mfg.
	OH Cost Per Rim
	Deluxe

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