Problem: The Jessie Lynne Company manufactures playground equipment. For 2004, budgeted manufacturing overhead is $240,000. Budgeted direct labor is $30,000 hours at a cost of $384,000. Budgeted machine hours are 12,500.
Q1. When production begins on Jan 1 2004, would it be a good idea for the managers to determine the cost of the manufacturing overhead associated with each swing set produced or should managers wait for this information until actual overhead cost amounts are available at the end of the year? Explain your reasoning.
Q2. If we were to assume to that managers need to know the manufacturing overhead cost associated with the playground equipment as soon as the equipment is manufactured, would actual overhead cost information be available when the first few swing sets are made in January? Explain your reasoning.