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: EEl (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. Data Table Begin by selecting the formula to compute the total estimated overhead (OH) costs. Total estimated Predetermined overhead allocation rateTotal estimated qty of the allocation base overhead costs Activity Allocation Base Allocation Rate Now compute the total estimated indirect manufacturing cost for 2018. $6.00 per part Materials handling Machine setup Insertion of parts Finishing Number of parts Number of setups Number of parts Number of finishing hours Total Estimated 600.00 per setup 22.00 per part 70.00 per hour Activity Materials handling Machine setup Insertion of parts Finishing Total estimated indirect manufacturing cost Requirement 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 ndirect Manufacturing Cost 24,000 16,800 88,000 402,500 531,300 Print Done rate to determine the estimated indirect manufacturing cost per wheel rim for each model, to the nearest cent. First, select the formula, and then enter the amounts to compute the allocation rate Allocation rate

Explanation / Answer

Answer 1 & 3

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

Answer 2

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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