Exercise 17-5 (Part Level Submission) Perdon Corporation manufactures safes-larg

Question

Exercise 17-5 (Part Level Submission) Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead. Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line Mobile Safes 190 300 460 810 Walk-in Safes 60 290 340 1,710 (a) The total estimated manufacturing overhead was $271,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25) (1) One mobile safe er unit s (2) One walk-in safe er unit

Explanation / Answer

Estimated manufactring overheads 271000 Mobile safes Walk in safes Total Direct labors 810 1710 2520 Manufacturing overheads 87107.14 183892.86 271000 (271000*810/2520) (271000*1710/2520) Number of products 190 60 Manufacturing overheads per unit 458.46 3064.88

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