Fortunado company uses abc to account for his chrome wheel process. They have id
ID: 2423502 • Letter: F
Question
Fortunado company uses abc to account for his chrome wheel process. They have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the upcoming year and their allocation bases are as follows:
Total Budgeted Manufactoring Overhead Cost
Activity Allocation Base
Fortnando Company to produce, 100 chrome wheels during the year. The wheels are expected to use 3,200 parts, require 25 setups, and consume 2,300 hours of fishing time.
Job 510 used 425 parts, required 6 setups, and consumed 300 finishing hours
Requirement 3: Computer the manufactoring overhead cost that shoud be assigned to Job 510
Material Handling $6,400 Number of parts Machine Setup $9,000 Number of setups Insertion of parts 54,400 Number of Parts Finishing 89,700 Finishing direct labor hours Total $159,500Explanation / Answer
Calculation of Activity rates:
Cost Pool
Amount
Total Activity
Activity Rate
A
B
A/B
Material Handling
$ 6,400.00
3200
Number of parts
$ 2.00
Machine Setup
$ 9,000.00
25
Number of setups
$ 360.00
Insertion of parts
$ 54,400.00
3200
Number of Parts
$ 17.00
Finishing
$ 89,700.00
2300
Finishing direct labor hours
$ 39.00
Total
$ 159,500.00
Calculation of manufacturing overhead cost that should be assigned to Job 510:
Cost Pool
Activity
Activity Rate
Overhead
A
B
A*B
Material Handling
425
Number of parts
$ 2.00
$ 850.00
Machine Setup
6
Number of setups
$ 360.00
$ 2,160.00
Insertion of parts
425
Number of Parts
$ 17.00
$ 7,225.00
Finishing
2,300
Finishing direct labor hours
$ 39.00
$ 89,700.00
Total Overhead Assigned
$ 99,935.00
Calculation of Activity rates:
Cost Pool
Amount
Total Activity
Activity Rate
A
B
A/B
Material Handling
$ 6,400.00
3200
Number of parts
$ 2.00
Machine Setup
$ 9,000.00
25
Number of setups
$ 360.00
Insertion of parts
$ 54,400.00
3200
Number of Parts
$ 17.00
Finishing
$ 89,700.00
2300
Finishing direct labor hours
$ 39.00
Total
$ 159,500.00
Calculation of manufacturing overhead cost that should be assigned to Job 510:
Cost Pool
Activity
Activity Rate
Overhead
A
B
A*B
Material Handling
425
Number of parts
$ 2.00
$ 850.00
Machine Setup
6
Number of setups
$ 360.00
$ 2,160.00
Insertion of parts
425
Number of Parts
$ 17.00
$ 7,225.00
Finishing
2,300
Finishing direct labor hours
$ 39.00
$ 89,700.00
Total Overhead Assigned
$ 99,935.00
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