We used data from exhibits 5 7 and schedule of depreciation charges recommended

# We used data from exhibits 5 7 and schedule of

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Question 5.We used data from exhibits 5, 7 and schedule of depreciation charges recommended. First, we found the burden rate of the new machine for the case when we treat it as aseparate center. We put all the costs from the exhibit 7 and used the formula: Burden\$/Machine Hours to calculate a burden rate. Year12345678Utilizationrate10%35%60%60%60%60%60%60%Machinehours4001,4002,4002,4002,4002,4002,4002,400 2
Managerial Accounting MBA11 Case Study: Seligram, Inc. Variable Overhead \$100,000 \$100,000 \$100,000 \$100,000 \$100,000 \$100,000 \$100,000 \$100,000 Depreciatio n Charge \$500,000 \$375,000 \$281,250 \$210,000 \$160,000 \$160,000 \$160,000 \$153,750 Fixed Overhead \$225,000 \$150,000 \$150,000 \$150,000 \$150,000 \$150,000 \$150,000 \$150,000 Total Costs \$825,000 \$625,000 \$531,250 \$460,000 \$410,000 \$410,000 \$410,000 \$403,750 Burden\$ / Machine Hrs. \$2,063 \$ 446 \$ 221 \$ 192 \$ 171 \$ 171 \$ 171 \$ 168 Next, we included costs and machine hours of the main test room (exhibit 5) to calculate the burden rate in the case when we treat a new machine as a part of main test room. We assumed that all the costs for the main test room remained as they were in 1988. Year 1 2 3 4 5 6 7 8 Main Test Room Machine hours 33,201 33,201 33,201 33,201 33,201 33,201 33,201 33,201 Variable Overhead \$887,37 9 \$887,37 9 \$887,37 9 \$887,37 9 \$887,37 9 \$887,37 9 \$887,37 9 \$887,37 9 Depreciati on \$88,779 \$88,779 \$88,779 \$88,779 \$88,779 \$88,779 \$88,779 \$88,779 Fixed Overhead \$1,126,9 58 \$1,126,9 58 \$1,126,9 58 \$1,126,9 58 \$1,126,9 58 \$1,126,9 58 \$1,126,9 58 \$1,126,9 58 Total Costs \$2,103,1 16 \$2,103,1 16 \$2,103,1 16 \$2,103,1 16 \$2,103,1 16 \$2,103,1 16 \$2,103,1 16 \$2,103,1 16 New Machine Machine hours 400 1,400 2,400 2,400 2,400 2,400 2,400 2,400 Variable Overhead \$100,00 0 \$100,00 0 \$100,00 0 \$100,00 0 \$100,00 0 \$100,00 0 \$100,00 0 \$100,00 0 Depreciati on \$500,00 0 \$375,00 0 \$281,25 0 \$210,00 0 \$160,00 0 \$160,00 0 \$160,00 0 \$153,75 0 Fixed Overhead \$225,00 0 \$150,00 0 \$150,00 0 \$150,00 0 \$150,00 0 \$150,00 0 \$150,00 0 \$150,00 0 Total Costs \$825,00 0 \$625,00 0 \$531,25 0 \$460,00 0 \$410,00 0 \$410,00 0 \$410,00 0 \$403,75 0 TOTAL Burden\$ / Machine Hrs. 87.14 78.85 74.00 72.00 70.59 70.59 70.59 70.42 3

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• Summer '19
• ICB, burden rate, test room, main test room