Old Port Shipyards does work for both the U.S. Navy and private shipping compani

Question

Old Port Shipyards does work for both the U.S. Navy and private shipping companies. Old Port's major business is renovating ships which i does at one of two company dry docks referred to by the names of the local towns: Olde Town and Newton. Data on operations and costs for the two dry docks follow Overhead cost Direct labor-hours $55,100,000 $95,000,000 190,000 190,000 Virtually all dry dock costs consist of depreciation. The Newton dry dock is much newer, so the depreciation on it is much higher. Dry dock overhead is charged to jobs based on direct labor-hours for the specific dock Old Port is about to start two jobs, one for the Navy under a cost-plus contract and one for a private shipping company for a fixed fee. Both jobs will require the same number of hours. You have been asked to prepare some costing information. Your supervisor tells you that she is sure the Navy job will be done at Newton and the private job ill be done at Olde Town. Required: (a) Compute the overhead rate at the two shipyards. Olde Town Newton per hour per hour (b) Why do you think your supervisor says that the Navy job wll be done at Newton? Higher cost at Newton O Lower cost at Newton References eBook& Resources Problem Leaming Objective: 07-02 Assign costs in a jotb cost system Difficulty: 2 Medium Learning Objective 07-03 Account for overhead using predetermined rates

Explanation / Answer

b. As for navy job is cost plus contract it is best to go for newton dock because higher the cost higher will be the profit

old town dock can be used for fixed contract job, the reason to take old town is beacause it costs less when it compare to newton. by which profits will be more

Old town newton overhead cost 55100000 95000000 direct labour hours 190000 190000 Overhead rate per hour 290 500

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.