75dlhunit 45000dlhs 60000inspections 12dlhunit

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Unformatted text preview: 00 units $16.00 $29.00 $ 2.00 $ 5.00 $ 4.50 $ 7.20 $ 2.00 $ $ 7.50 $ 4.00 $ 3.50 $13.80 $ 7.00 $ 6.80 Chapter 5 Chapter 5 • Tiger Pride’s managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Activity Activity cost Activity­cost driver • • • Supervision Inspection $100,920 $124,000 Direct labor hours (DLH) Inspections Chapter 5 Chapter 5 • Activities demanded T­SHIRTS • SWEATSHIRTS 0.75 DLH/unit • 45,000 DLHs • 60,000 inspections • 1.2 DLH/unit 42,000 DLHs 17,500 inspections Chapter 5 Chapter 5 • Under the revised ABC system, the activity­cost driver rate for the supervision activity is Chapter 5 Chapter 5 • 100,920/87,000 = 1.16 Chapter 5 Chapter 5 • Ernsting Printers has contracts to complete weekly supplements required by forty­six customers. For the year 20x5, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12 million pages. For 20x5 Ernsting Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis: • Chapter 5 Chapter 5 • • • • Cost pool Manufacturing overhead costs Activity level Design changes $ 60,000 300 design changes Setups 320,000 5,000 setups Inspections 40,000 8,000 inspections Total manufacturing overhead costs $420,000 Chapter 5 Chapter 5 • During 20x5, two customers, Wealth Managers and Health Systems, are expected to use the following printing services: Wealth Managers Health Systems • Activity 60,000 76,000 • Pages 0 • Design changes 10 20 10 • Setups 30 38 • Inspections What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 12 million pages of production capacity? $0.35 Using the three cost pools to allocate overhead costs, what is the total manufacturing overhead cost estimate for Wealth Managers during 20x5? $3,430 = (10 x $200 per change = $2,000) + (20 x $64 per setup = $1,280) + (30 x $5 per inspection = $150) Chapter 6 Chapter 6 • You need to know: – – – – – – Mater budget. Budgeting cycle. Operating budget and financial budget. Advantages of budgets. Rolling budgets. B...
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