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Unformatted text preview: C3-34 Kelvin Aerospace, Inc.1. Recomputed Predetermined Overhead RateOriginal manufacturing overhead$3,402,000 Cost of automated milling machine$348,000 Cost of technician/programmer$50,000 Revised manufacturing overhead$3,800,000 Original direct labor hours63,000 Reduction in direct labor hours6,000 Revised direct labor hours57,000 Revised manufacturing overhead$3,800,000 Revised direct labor hours57,000 Revised overhead rate$66.67 The revised overhead rate will be higher because the revised manufacturing overhead cost will be raised by $398,000 while the revised direct labor hours will be lowered by 6,000 DLH.2. Effect of Revised Overhead Rate on Non-Milling Machine JobsAcquisition of the automated milling machine center will increase the costs of all jobs because the company uses a plantwide overhead rate. This means that jobs that do not use the new milling center will be subsidizing jobs that require the milling center....
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This note was uploaded on 02/10/2011 for the course UGBA 102B taught by Professor Fan during the Spring '08 term at University of California, Berkeley.
- Spring '08