Frameworks Artisans creates hand-painted picture frames. The frames are cast fro

Question

Frameworks Artisans creates hand-painted picture frames. The frames are cast from resin in an automated process. Once the casting is done, talented artisans hand-paint one of fifteen designs on each frame. In the final assembly process, a worker inserts the glass pane and attaches the backing to the frame. Frameworks’ budget for the current year, along with the production requirements for two of the frames it produces, are as follows: Casting Painting Assembly Direct labor hours — 60,000 12,000 Machine hours 28,000 — 800 Manufacturing overhead cost $252,000 $276,000 $48,000 Seasons of Fun Frame: Casting Painting Assembly Direct labor hours — 0.5 0.1 Machine hours 1 — 0.05 Birth Announcement Frame: Casting Painting Assembly Direct labor hours — 1 0.2 Machine hours 0.5 — 0.05

The accountant has attended a few more classes and now wants to explore the use of departmental predetermined overhead rates. She has decided that machine hours is the best overhead application base for the casting department and direct labor hours is the best base for the painting and assembly departments. Using the departmental overhead application rates the accountant has decided on, calculate the amount of overhead applied to a Seasons of Fun frame and a Birth Announcement frame. (Round overhead rates to 2 decimal places, e.g. 3.54.)

Explanation / Answer

CASTING

Based on machine hours => 252000 /28000 => $9per machine hour

PAINTING

Based on labour hours => 276000 /60000 => $ 4.6 per labour hour

ASSEMBLY

Based on labour hours => 48000 /12000 => $ 4 per labour hour

Seasons flame

casting => 1*28000 => 28000hours * $9 => $252000

painting => 0.5 *60000 => 30000hours * $4.6 => $138000

Assembly => 0.1 * 12000 => 1200 hours * $4 =>$4800

TOTAL OVERHEADS => 252000 + 138000 + 4800 => $394800

Birth Announcemment

casting => 0.5*28000 => 14000hours * $9 => $126000

painting => 1 *60000 => 60000hours * $4.6 => $276000

Assembly => 0.20 * 12000 => 2400 hours * $4 =>$9600

TOTAL OVERHEADS => 126000 + 276000 + 9600 => $ 411600

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