Berly\'s, a chocolate manufacturer, produces three types of chocolate, dark, mil

Question

Berly's, a chocolate manufacturer, produces three types of chocolate, dark, milk, and white, in a plant with different production lines. Berly's is using a single plantwide over- head rate to allocate its annual manufacturing overhead cost of $1,746,000 and total machine hours run totaled 18,000 hours. The total manufacturing overhead cost and total machine hours run under the three production lines are as follows: Activity Dark chocolate... Overhead Cost Machine Hours $580,000 $802,000 $366,000 5,000 9,000 4,000 Berly's decided to use machine hours as the cost driver of manufacturing overhead costs Requirements 1. What is Berly's plantwide overhead rate? 2. Compute the departmental overhead rates for the three different production lines. Round all answers to the nearest cent. Which products have been overcosted or undercosted by the plantwide system? By how much? 3.

Explanation / Answer

Requirement _ 1

What is Berly's plantwide overhead rate ?

= Total overhead / Total machine hours = 1746,000 / 18000 = $ 97 per hour

Requirement _ 2

Question - 3

DC MC WC Overhead cost 580000 802000 366000 (/) Machine Hours 5000 9000 4000 Overhead cost per hour 116 89.11 91.5

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