Week 4 Mod 4-1 - Allocation Rate = Estimated Overhead...

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Allocation Rate = Estimated Overhead / Estimated DL Cost Estimated DL Cost = Estimated OH / Allocation Rate Estimated OH = Allocation Rate * Extimated DL Cost Estimated OH $500,000.00 Estimated OH $50,000.00 Estimated DL Cost $100,000.00 Estimated DL Cost div $2,500,000.00 Allocation Rate div 0.5000 Allocation Rate * 0.5000 Allocation Rate eq 0.2000 Estimated DL Cost eq $100,000.00 Estimated OH eq $50,000.00 Overhead Application = Application Rate * Direct Labor Application Rate = OH App / DL DL = OH App / App Rate Application Rate 0.2000 OH Application $10,000.00 OH Application $10,000.00 Direct Labor * $100,000.00 Direct Labor div $100,000.00 App Rate div 0.1000 Overhead Application eq $20,000.00 Application Rate eq 0.1000 Direct Labor eq $100,000.00 Unit costs = (Indirect Overhead + Direct Labor + Direct Material) / # Units produced Indirect OH (OH App) $20,000.00 Direct Labor + $100,000.00 Given Direct Materials + $60,000.00 Given sub eq $180,000.00 # Units Produced div 2,000.00 Given UNIT COST eq $90.00 EXAMPLE ProPats Allocation Rate = Estimated Overhead / Estimated DL Cost Hats Shirts Banners Direct Materials $5,000.00 $5,000.00 $5,000.00 Estimated OH $3,000.00 Direct Labor $1,000.00 $1,000.00 $1,000.00 Estimated DL Cost div $3,000.00 Allocation Rate eq 1.0000 Unites produced 1,000.00 Overhead Application = Application Rate * Direct Labor Est. OH (DL) $3,000.00 Application Rate 1.0000 Direct Labor * $1,000.00 Overhead Application eq $1,000.00 Unit costs = (Indirect Overhead + Direct Labor + Direct Material) / # Units produced Indirect OH (OH App) $1,000.00 Direct Labor + $1,000.00 Given Direct Materials + $5,000.00 Given sub eq $7,000.00 # Units Produced div 1,000.00 Given UNIT COST eq $7.00 EXAMPLE 2 ProPats Allocation Rate = Estimated Overhead / Estimated DL Cost Hats Shirts Banners Direct Materials $5,000.00 $5,000.00 $5,000.00 Estimated OH $3,500.00 Direct Labor $1,000.00 $1,000.00 $1,000.00 Estimated DL Cost div $2,500.00 Allocation Rate eq 1.4000 Unites produced 1,000.00 Overhead Application = Application Rate * Direct Labor Est. OH (DL) $3,500.00 $3,000.00 $3,000.00 DL Costs $2,500.00 $3,000.00 $3,000.00 Application Rate 1.4000 Direct Labor * $1,000.00 Indirect OH or OH App eq $1,400.00 Unit costs = (Indirect Overhead + Direct Labor + Direct Material) / # Units produced Indirect OH (OH App) $1,400.00 Direct Labor + $1,000.00 Given Direct Materials + $5,000.00 Given sub eq $7,400.00 # Units Produced div 1,000.00 Given UNIT COST eq $7.40 EXAMPLE 3 Incredible Hulls Allocation Rate = Estimated Overhead / Estimated DL Cost Sail Power Cost Pool A Cost Pool B Cost Pool C Direct Materials $50,000.00 $100,000.00 Estimated OH Pool $50,000.00 $50,000.00 $140,000.00 Direct Labor $100,000.00 $100,000.00 Estimated Amount div 200,000.00 500.00 1,000.00 Allocation Rate eq 0.2500 100.0000 140.0000 Unites produced 16.00 20.00 Overhead Application = Application Rate * Direct Labor Est. OH (DL) DL Costs Application Rate 0.2500 Direct Labor * $1,000.00 Activy Cost Pool Est Annual Cost Est Activity Level Indirect OH or OH App eq $250.00 A Supervision $50,000.00 $200,000.00 DL Costs Unit costs = (Indirect Overhead + Direct Labor + Direct Material) / # Units produced B Materials Hand $50,000.00 500.00 Moves C Machine $140,000.00 1,000.00 Mech Hours Indirect OH (OH App) $250.00 Total OH $240,000.00 Direct Labor + $1,000.00 Given Direct Materials + $5,000.00 Given Calc Activity Rate for supervisory sub eq $6,250.00 # Units Produced div 1,000.00 Given UNIT COST eq $6.25 Complete ABC system EXAMPLE 3 ProPats Allocation Rate = Estimated Overhead / Estimated DL Cost Hats Shirts Banners Cost Pool A Cost Pool B Cost Pool C Total Allocation Rate Direct Materials $5,000.00 $5,000.00 $5,000.00 Estimated OH Pool $600.00 $400.00 $2,000.00 Direct Labor $1,000.00 $1,000.00 $1,000.00 Estimated Amount div 3,000.00 10.00 2,000.00 Allocation Rate eq 0.20 40.00 1.00 $41.20 Unites produced 1,000.00 1,000.00 $1,000.00 Overhead Application = Application Rate * Direct Labor Est. OH (DL) DL Costs
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