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 (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. Read the requirements i Requirements Requirement 1. Compute the total estimated indirect manufacturing cost for 2018. Begin by selecting the formula to compute the total estimated overhead (OH) costs. Predetermined overhead allocation rate x Total estimated qty of the allocation base Total estimated overhead costs , 1. Compute the total estimated indirect manufacturing cost for 2018. 2. 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. 3. Compute the estimated ABC Indirect manufacturing cost per unit of each model for 2018. Carry each cost to the nearest cent. Now compute the total estimated indirect manufacturing cost for 2018. Total Estimated Indirect Manufacturing Cost Activity Data Table Materials handling Machine setup Insertion of parts Finishing Total estimated indirect manufacturing cost Activity Materials handling Machine setup Insertion of parts Finishing Allocation Base Number of parts Number of setups Number of parts Number of finishing hours Predetermined Overhead Allocation Rate $ 6.00 per part 600.00 per setup 22.00 per part 70.00 per hour

Explanation / Answer

Calculate total estimated indirect manufacturing cost :

Standard Deluxe Material handling 12 36 Machine setup 8400 8400 Insertion of parts 44 132 Finishing 350 455 Total indirect manufacturing cost 8806 9023

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