mapter 7 A. Using the following Information, determine the overhead to be applie
ID: 2584025 • Letter: M
Question
mapter 7 A. Using the following Information, determine the overhead to be applied to each activity. Activity Inspection hours Setup hours Machine hours Estimated Product A. Product B Total Predetermined MOH MOH Activity Activity Activity Application rate $1,000 50 150 per hour $2,000 600 per set up $3,000 100 200 per hour 400 B. What is the MOH applied to each activity and in total for Products A & B? Product A MOH Applied Product B MOH Applied Inspection hours | Setup hours Machine hours Total MOH C. What would be the MOH applied per unit for product A if there are 50 units produced of Product A? D. What would be the MOH applied per unit for product B if there are 25 units produced of Product B?Explanation / Answer
Solution:
Part A –
Activity
Estimated
Product A
Product B
Total
Predetermined MOH
MOH
Activity
Activity
Activity
Application Rate
(A)
(B)
(A/B)
Inspection hours
$1,000
50
150
200
$5.00
per hour
Setup hours
$2,000
400
600
1000
$2.00
per setup
Machine hours
$3,000
100
200
300
$10.00
per hour
$6,000
Part B – MOH applied to each activity
Product A
Product B
MOH Applied
MOH Applied
Inspection hours
$250
(50*$5)
$750
(200*$5)
Setup hours
$800
(400*$2)
$1,200
(600*$2)
Machine hours
$1,000
(100*$10)
$2,000
(200*$10)
Total MOH
$2,050
$3,950
Part C – MOH applied per unit for Product A
Total MOH Applied for Product A (as per part b) = $2,050
Total Production Units = 50 Units
MOH Applied Per Unit = TOTAL MOH / Total Units = $2,050 / 50 = $41 per unit
Part D – MOH applied per unit for Product A
Total MOH Applied for Product B (as per part b) = $3,950
Total Production Units = 25 Units
MOH Applied Per Unit = TOTAL MOH / Total Units = $3,950 / 25 = $158 per unit
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Activity
Estimated
Product A
Product B
Total
Predetermined MOH
MOH
Activity
Activity
Activity
Application Rate
(A)
(B)
(A/B)
Inspection hours
$1,000
50
150
200
$5.00
per hour
Setup hours
$2,000
400
600
1000
$2.00
per setup
Machine hours
$3,000
100
200
300
$10.00
per hour
$6,000
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