SHOW ALL WORK! 2.Ratchford Clocks manufactures alarm clocks and wall clocks, and
ID: 2392377 • Letter: S
Question
SHOW ALL WORK!
2.Ratchford Clocks manufactures alarm clocks and wall clocks, and allocates overhead based on direct labor hours. The production process is set up in three departments: Assembly, Finishing, and Calibrating. The following is information regarding the direct labor used to produce one unit of the two clocks Finishing Calibrating Per Unit Hours: Alarm clocks Wall clocks Assembly Totals The budget includes the following factory overhead by department: Assembly Department Finishing Department Calibrating Department $595,000 200,000 140,000 $935,000 Total Ratchford Clocks is planning to manufacture 50,000 alarm clocks and 10,000 wall clocks. (a) Determine the total number of hours that will be needed by department. (b) Determine the factory overhead rate by department using the multiple production department (c) Determine the amount of factory overhead to be allocated to each unit of alarm clocks and wall (d) Determine the amount of total factory overhead to be allocated to the alarm clocks and wall factory overhead rate method. clocks. clocks.Explanation / Answer
Answer
a ) determine total hours required by department
assembly department = 5 * 60000 ( unit of production = 50000 + 10000 )
= 170000
finishing department = 4 * 60000
= 80000
calibrating department = 3 * 60000.
= 70000
b ) determine the factory overhead rate
assembly department = 595000 / 170000
= 3.50
finishing department = 200000 / 80000
= 2.50
calibrating department = 140000 / 70000
= 2.00
c ) determine the factory overhead to each unit
alarm clock = 3*3.50 + 1*2.50 + 1*2.00
= 15.00 per unit
wall clock = 2*3.50 + 3*2.50 + 2*.2.00
= 18.50 per unit
d ) the amount of factory overhead
alarm clock = 750000 ( 50000 * 15.00 )
wall clock = 185000 ( 10000 * 18.50 )
total = 935000.00
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