Easton Company manufactures wheel rims. The controller expects the following ABC

Question

Easton Company manufactures wheel rims. The controller expects the following ABC allocation rates for 2018 EEE (Click the icon to view the allocation rates.) Easton produces two wheel rim models: standard and deluxe. Expected data for 2018 are as follows: ?(Click the icon to view the expected data.) The company expects to produce 500 units of each model during the year Requirements Compute the total estimated indirect manufacturing cost for 2018 Prior to 2018, Easton used a single plantwide overhead allocation rate system with direct labor hours as the allocation base. Compute the predetermined overhead allocation rate based on direct labor hours for 2018. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model, to the nearest cent Compute the estimated ABC indirect manufacturing cost per unit of each model for 2018. Carry each cost to the nearest cent. 1. 2. Requirement 1. Compute the total estimated indirect manufacturing cost for 2018. Begin by selecting the formula to compute the total estimated ovhead (OH) costs. Total e - overhead 3. Data Table Data Table Print Done Predetermined Overhead Standard Deluxe Allocation Base Allocation Rate Parts per rim Setups per 500 rims Finishing hours per rim Total direct labor hours per rim 2.0 14.0 5.0 7.0 6.0 14.0 6.5 8.0 Materials handling Machine setup Insertion of parts Finishing Number of parts Number of setups Number of parts Number of finishing hours $ 6.00 per part 600.00 per setup 22.00 per part 70.00 per hour PrintDone PrintDone

Explanation / Answer

Answer 1 & 3

Answer 2

Total Overhead Expense = 211,400+319,900 = 531,300

Overhead allocation rate = 531,300 / 7,500 = $70.84 per Direct Labour Hour

Overhead assigned per unit of Standard Model = 70.84 * 7 =495.88

Overhead assigned per unit of Deluxe Model = 70.84 * 8 =566.72

Material Handling 6 Per part          1,000 Parts                            6,000                3,000 Parts                   18,000 Machine Setup 600 per Setup                14 Setups                            8,400                      14 Setups                      8,400 Insertion of Parts 22 per part          1,000 Parts                          22,000                3,000 Parts                   66,000 Finishing 70 per hour          2,500 Hours                      1,75,000                3,250 Hours                2,27,500 Total Ovehead                      2,11,400 Total Ovehead                3,19,900 Total Units Produced                                500 Total Units Produced                         500 Overhead Cost / unit                          422.80 Overhead Cost / unit                   639.80

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