Exercise 17-5 (Part Level Submission) Perdon Corporation manufactures safes-larg

Question

Exercise 17-5 (Part Level Submission) Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead Units planned for productionn Material moves per product line Purchase orders per product line Direct labor hours per product line Mobile Safes 190 290 440 790 Walk-in Safes 40 190 340 1,690 Your answer is correct The total estimated manufacturing overhead was $260,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25.) (1) One mobile safe (2) One walk-in safe Click if you would like to Show Work for this question: Open Show Work 435.90 per unit 4429.43 per unit SHOW SOLUTION LINK TO TEXT Attempts: 3 of 7 used

Explanation / Answer

Under Activity Based Costing, the overhead costs are:

Material handling costs assigned to

One mobile safe: $508.77

One walk-in safe: $,1583.32

Explanation :

Total material handling cost = 160000

Activity = 290 + 190 = 480

Material handilng cost = 160000 / 480 = 333.33

One Mobile safe cost per unit = (333.33 * 290) / 190 = 508.77

One walk-in safe = ( 333.33 * 190) / 40 = 1583.32

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