Tutorial 4 Answers - THE UNIVERSITY OF NEW SOUTH WALES...

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1 THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ACCOUNTING ACCT2522 Management Accounting: Process Improvement and Innovation Session 2, 2009 Tutorial Week 4 - Managing Cost I: A Closer Look at Overhead Costs Suggested Solutions Question 1: Case 7.52 Support department cost allocation; plantwide versus departmental overhead rates; product costing; cost drivers: manufacturer 1. (a) Plantwide overhead rate: Departments (numbers in thousands) Moulding Component Assembly Total Total manufacturing department overhead $42 000 $32 400 $45 200 $119 600 Support departments: Power 36 800 Maintenance 8 000 Total estimated overhead $164 400 Estimated direct labour hours (DLH): Moulding 500 Component 2 000 Assembly 1 500 Total estimated direct labour hours 4 000 Plantwide overhead rate: = estimated overhead estimated DLH = $164 400 4000 = $41.10 per direct labour hour (b) Overhead cost of Elite case = (4 +3 + 2) × $41.10 = $369.90
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2 2. Departmental overhead rates: Departments (numbers in thousands) Support Manufacturing Power Maintenance Moulding Component Assembly Departmental overhead costs $36 800 $8 000 $42 000 $32 400 $45 200 (a) Allocation of maintenance costs (direct method). Proportions: 90/125, 25/125, 10/125 (8 000) 5760 1600 640 (b) Allocation of power costs (direct method): Proportions: 360/800, 320/800, 120/800 (36 800) 16 560 14 720 5 520 Total allocated departmental overhead costs $ 0 $ 0 $64 320 $48 720 $51 360 (c) Cost driver 875 MH 2 000 DLH 1 500 DLH Rate (departmental overhead ÷ units of cost driver)
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This note was uploaded on 01/31/2012 for the course ACCT acct taught by Professor A during the Three '11 term at University of New South Wales.

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Tutorial 4 Answers - THE UNIVERSITY OF NEW SOUTH WALES...

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