Perdon Corporation manufactures safes-large mobile safes, and large walk-in stat

Question

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 Mobile Safes Walk-In Safes Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line 200 300 450 800 60 250 340 1,700 The total estimated manufacturing overhead was $277,700. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round intermediate calculations and answers to 2 decimal places, e.g. $12.25.) (1) One mobile safe (2) One walk-in safe

Explanation / Answer

using direct labor hours mobile safe walk in safe labor hours 800 1700 2500 overhead 88864 188836 277700 (277700/2500) 111.08 material cost mobile safe walk in safe total material moves 300 250 550 materai cost 96545.4545 80454.55 177000 purchasing activity cost mobile safe walk in safe total purchase order 450 340 790 materai cost 57360.7595 43339.24 100700 Comparison traditional ABC mobile safe 88864 153906.2 walk in safe 188836 123793.8 277700 277700

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