Need this solved within an hour:
A manufacturing produces three products: Desk, Chairs, and Cabinets. The following information is available for each product.
|
|
Desk
|
Chairs
|
Cabinets
|
|
Direct material cost per unit
|
$60.00
|
$30.00
|
$50.00
|
|
Direct labor cost per hour
|
$15.00
|
$16.75
|
$12.80
|
Bella Manufacturing presently applies overhead using a predetermined rate based on direct labor hours.The product leader for Chairs has suggested that Bella Manufacturing switch to activity-based costing and identified the following activities, cost drivers, estimated costs, and estimated cost driver units for the year:
|
Activity
|
Recommended Cost Driver
|
Estimated Cost
|
Estimated Cost Driver Units
|
|
Ordering Cost
|
Purchase Orders
|
$33,912
|
1,256 Purchase Orders
|
|
Machine Operations
|
Machine Hours
|
$2,430,000
|
13,500 hours
|
|
Environmental Compliance
|
Compliance Test
|
$125,400
|
110 test
|
|
|
|
$2,589,312
|
|
The following is actual information for April
|
|
Actual April Production
|
|
|
Desk
|
Chairs
|
Cabinets
|
|
Number of Units Produced
|
4,375
|
8,200
|
5,400
|
|
Direct Labor Hours
|
58,250
|
45,200
|
42,250
|
|
Machine Hours
|
375
|
206
|
442
|
|
Compliance Test
|
2
|
3
|
5
|
|
|
|
|
|
|
Purchase Orders
|
34
|
59
|
45
|
Required:
1. Compute the predetermined overhead rate for each cost driver recommended by the product leader of Chairs.
2. Estimate the total overhead allocated to Chairs for April using Activity Based Costing
3. Estimate the total overhead allocated to Cabinets for April using Activity Based Costing