question archive 1) Poodle Company manufactures two products, Mini A and Maxi B
1) Poodle Company manufactures two products, Mini A and Maxi B
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1) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:
|
Mini A |
Maxi B |
|
|
Direct labor hours |
15,000 |
25,000 |
|
Machine setups |
600 |
400 |
|
Machine hours |
24,000 |
26,000 |
|
Inspections |
800 |
700 |
Overhead applied to Mini A using traditional costing using direct labor hours is
2) Vaughn Company manufactures two models of its hammock, the Superior and the Deluxe. The Superior model requires 10800 direct labour hours and the Deluxe requires 40900 direct labour hours. The company produces 4300 units of the Superior model and 1000 units of the Deluxe model cach year. The company praduces the Superior model in batch sizes of 200, while it produces the Deluxe model in batch sizes of 100. The company expects to incur $126000 of total setup costs this year. How much of the setup costs are allocated to the Superior model using ADC costing?
$86000
$63000
$23774
$100000
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Answer:
1.
Total direct labor hours = $15,000 + $25,000
Total direct labor hours = $40,000
Total overhead cost = $800,000 + $1,800,000 + $600,000
Total overhead cost = $3,200,000
Overhead applied = 15,000/40,000*3,200,000
Overhead applied = $1,200,000
2.
Superior model batches = 4300/200 = 21.50
Deluxe model batches = 1000/100 = 10
Setup cost allocated to superior model = 126000*21.50/31.50 = 86000
So answer is a) $86000
