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26) For normal costing, even though the indirect-cost rate is based on actual, indirect costsare allocated to products based on the normal capacity of the cost-allocation base.Diff: 2Objective: 5AACSB: Analytical thinking27) Chief Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Somerset High School Science Olympiad Jacket job.CompanySomerset High School JobDirect materials$25,000$600Direct manufacturing labor$5,000$200Manufacturing overhead costs $20,000Machine-hours40,000 mh800 mhRequired:a.For Chief Manufacturing, determine the annual manufacturing overhead cost-allocationrate.b.Determine the amount of manufacturing overhead costs allocated to the Somerset High School job.c.Determine the estimated total manufacturing costs for the Somerset High School job. Diff: 2Objective: 4, 5AACSB: Analytical skills28) Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 2018, the following estimates were provided for the coming year:
MachiningAssemblyDirect labor-hours10,000 dlh90,000 dlhMachine-hours100,000 mh5,000 mhDirect labor cost$ 80,000$720,000Manufacturing overhead costs$250,000$360,000The accounting records of the company show the following data for Job #846:MachiningAssemblyDirect labor-hours50 dlh120 dlhMachine-hours170 mh10 mhDirect material cost$2,700$1,600Direct labor cost$ 400$ 900Required:a.Compute the manufacturing overhead allocation rate for each department.b.Compute the total cost of Job #846.c.Provide possible reasons why Hill Manufacturing uses two different cost allocation rates. Answer: