PLANTWIDE, DEPARTMENT, AND ABC INDIRECT COST RATES. Roadster Company (RC) designs and produces automotive parts. In 2020, the actual variable manufacturing overhead is $280,000. RC's simple costing system allocates variable manufacturing overhead to its three customers based on machine hours and prices its contracts based on full costs. One of its customers has regularly complained of being charged noncompetitive prices, so RC's controller Matthew Draper realizes that it is time to examine the consumption of overhead resources more closely. He knows that there are three main departments that consume overhead resources: design, production, and engineering. Interviews with the department personnel and examination of time records yield the following detailed information: 1 Home A Insert Page Layout Formulas B 2 Department 3 Design 4 Production 5 Engineering 6 Total Cost Driver CAD-design-hours Engineering-hours Machine-hours Data с Review Manufacturing Overhead in 2020 $ 35,000 25,000 220,000 $280,000 View D ▬▬▬E F Usage of Cost Drivers by Customer Contract Caesar Motors Southern Motors 150 130 300 250 100 3,700 Jupiter Auto 100 270 1,000
PLANTWIDE, DEPARTMENT, AND ABC INDIRECT COST RATES. Roadster Company (RC) designs and produces automotive parts. In 2020, the actual variable manufacturing overhead is $280,000. RC's simple costing system allocates variable manufacturing overhead to its three customers based on machine hours and prices its contracts based on full costs. One of its customers has regularly complained of being charged noncompetitive prices, so RC's controller Matthew Draper realizes that it is time to examine the consumption of overhead resources more closely. He knows that there are three main departments that consume overhead resources: design, production, and engineering. Interviews with the department personnel and examination of time records yield the following detailed information: 1 Home A Insert Page Layout Formulas B 2 Department 3 Design 4 Production 5 Engineering 6 Total Cost Driver CAD-design-hours Engineering-hours Machine-hours Data с Review Manufacturing Overhead in 2020 $ 35,000 25,000 220,000 $280,000 View D ▬▬▬E F Usage of Cost Drivers by Customer Contract Caesar Motors Southern Motors 150 130 300 250 100 3,700 Jupiter Auto 100 270 1,000
Chapter1: Financial Statements And Business Decisions
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