Barnes Corporation manufactures two models of office chairs, a standard and a de
ID: 2378558 • Letter: B
Question
Barnes Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled.
Number of Number of Number of
Product Setups Components Direct Labor Hours
Standard 22 8 375
Deluxe 28 12 225
Overhead costs $20,000 $40,000
Assume a traditional single-rate costing system applies the total $60,000 of overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard model and how would that be journalized? (2 points)
Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the number of setups amount of overhead costs assigned to the deluxe model? (2 points)
Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model and how would that be journalized? (3 points)
Barnes Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled. Assume a traditional single-rate costing system applies the total $60,000 of overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard model and how would that be journalized? Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the number of setups amount of overhead costs assigned to the deluxe model? Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model and how would that be journalized?Explanation / Answer
1. overhead costs assigned to the standard model = 60000*375/(375+225)=$37500
Journal Entry
Debit Work in Process $37500
Credit Factory Overhead for Standard $37500
2. number of setups amount of deluxe model = 28
number of setups amount of overhead costs assigned to the deluxe model= 20000*28/(28+22) =$11200
3 number of components for delux model = 12
number of components amount of overhead costs assigned to the deluxe model = 40000*12/(12+8) =$24000
total amount of overhead costs assigned to thedeluxe model = 11200+24000=$35200
Journal Entry
Debit Work in Process $35200
Credit Factory Overhead for Deluxe $35200
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