Ellis Perry is an electronics components manufacturer. Information about the com

Question

Ellis Perry is an electronics components manufacturer. Information about the company’s two products follows:

NEED HELP WITH PART B:

THANK YOU!

Problem 7-21 (Part Level Submission) Ellis Perry is an electronics components manufacturer. Information about the company's two products follows Units produced Direct labor hours required for production Units per batch Shipping weight per unit AM-2 21,200 28,000 4,000 FM-9 3,690 24,000 90 0.50 lbs 4 lbs The company incurs $1,505,079 in overhead per year and has traditionally applied overhead on the basis of direct labor hours Your answer is correct. (i) How much overhead will be allocated to each product using the traditional direct labor hours allocation base? (Round per unit rates to 2 decimal places, e.g. 3.54 and final answers to 0 decimal places, e.g. 45,000.) AM-2 FM-9 Overhead allocated to each product 694651.85 810427.15 $ (ii) What overhead cost per unit will be allocated to each product? (Round answers to 2 decimal places, e.g. 15.25.)

Explanation / Answer

(b) (i)Calculation of overhead cost on the basis of cost drivers: Calculation of activity rates: Activity cost pools Estimated total cost(a) Estimated cost driver(b) activity rates((a)/(b)) Assembly 1144000 52000 direct labour hours 22.00 Set up 122695 46.3 batches 2650.00 Packaging 238384 25360 lbs 9.40 Calculation of total overhead cost of AM-2 Activity cost pools (a) activity rates(b) cost(a*b)(in$) Assembly 28000 direct labour hours 22.00 616000 Set up 5.3 batches 2650.00 14045 Packaging 10600 lbs 9.40 99640 Total overhead cost 729685 Units produced 21200 Overhead cost per unit(729685/21200) 34.42 Calculation of total overhead cost of FM-9 Activity cost pools (a) activity rates(b) cost(a*b)(in$) Assembly 24000 direct labour hours 22.00 528000 Set up 41 batches 2650.00 108650 Packaging 14760 lbs 9.40 138744 Total overhead cost 775394 Units produced 3690 Overhead cost per unit(775394/3690) 210.13 Working: 1) total direct labour hours= 28000+24000= 52000 direct labour hours 2) Calculation of number of batches Batch for AM-2= 21200/4000= 5.3 batch Batch for FM-9= 3690/90= 41 batches Total batch= 5.3+41= 46.3 batch 3) calculation of weight: Weight for AM-2= 21200*0.5= 10600 lbs Weight for FM-9= 3690*4= 14760 lbs Total weight= 10600+14760= 25360 lbs Therefore overhead cost is AM-2=$729685 AFM-9= $775394 (ii)Therefore overhead cost per unit is AM-2=$34.42 AFM-9= $210.13

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

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