Predetermined Overhead Rate Applied Overhead Unit Cost Ripley Inc costs

Predetermined overhead rate applied overhead unit

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Predetermined Overhead Rate, Applied Overhead, Unit CostRipley, Inc., costs products using a normal costing system. The following data are available for last year:Overhead is applied on the basis of direct labor hours. 1. What was the predetermined overhead rate? …. $ 28 per direct labor hour……….285600/ 10200=28 overhead/direct labor hours 2. What was the applied overhead for last year? 3. Was overhead over- or underapplied, and by how much? 4. What was the total cost per unit produced (carry your answer to four significant digits)?
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1. Determine the unit cost for each model using direct labor hours to apply overhead. Unit Cost Model A 165 Model B 225 Overhead rate = $2,080,000/8,000 = $260 per direct labor hour Model A Model B Direct materials ......... $ 600,000 $ 800,000 Direct labor ................ 480,000 480,000 Overhead* .................. 1,560,000 520,000 Total cost ................... $2,640,000 $1,800,000 Units ........................... ÷ 16,000 ÷ 8,000 Unit cost ..................... $ 165 $ 225 *Overhead assigned = $260 × 6,000 hours; $260 × 2,000 hours 2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent. Unit Cost Model A 132.50 Model B 290
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Setups: $480,000/600 = $800 per setup Ordering: $360,000/18,000 = $20 per order Machining: $840,000/42,000 = $20 per machine hour Receiving: $400,000/10,000 = $40 per receiving hour Model A Model B Direct materials ......... $ 600,000 $ 800,000 Direct labor ................ 480,000 480,000 Overhead: Setups ................... 320,000 160,000 ($800 × 400; $800 × 200) Ordering ................ 120,000 240,000 ($20 × 6,000; $20 × 12,000) Machining ............. 480,000 360,000 ($20 × 24,000; $20 × 18,000) Receiving .............. 120,000 280,000 ($40 × 3,000; $40 × 7,000) Total costs ................. $2,120,000 $2,320,000 Units ........................... ÷ 16,000 ÷ 8,000 Unit cost $ 132.50 $ 290.00 3.Which method produces the more accurate cost assignment? Four activitydriversQuestion 3Exercise 4.21
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