Financial and Managerial Accounting
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 17
Exercise 17-6 Plantwide overhead rate L.O. P1
[The following information applies to the questions displayed below.]
| Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow. |
| Molding | Trimming | |||||||||
| Direct labor hours | 52,000 | DLH | 48,000 | DLH | ||||||
| Machine hours | 30,500 | MH | 3,600 | MH | ||||||
| Overhead costs | $ | 730,000 | $ | 590,000 | ||||||
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| Data for two special order parts to be manufactured by the company in 2011 follow: |
| Part A27C | Part X82B | |||||||
| Number of units | 9,800 | units | 54,500 | units | ||||
| Machine hours | ||||||||
| Molding | 5,100 | MH | 1,020 | MH | ||||
| Trimming | 2,600 | MH | 650 | MH | ||||
| Direct labor hours | ||||||||
| Molding | 5,500 | DLH | 2,150 | DLH | ||||
| Trimming | 700 | DLH | 3,500 | DLH | ||||
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1.Exercise 17-6 Part 1
| Required | |
| 1. | Compute the plantwide overhead rate using direct labor hours as the base. (Round your answer to 2 decimal places. Omit the “$” sign in your response.) |
| Plantwide overhead rate |
rev: 03-04-11
2.
Exercise 17-6 Part 2
| 2. | Determine the overhead cost assigned to each product line using the plantwide rate computed in part 1.(Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.) |
| Product | Overhead cost |
| Part A27C | |
| Part X82B | |
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3.
Exercise 17-7 Departmental overhead rates L.O. P2
| Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow. |
| Molding | Trimming | |||||||||
| Direct labor hours | 52,000 | DLH | 48,000 | DLH | ||||||
| Machine hours | 30,500 | MH | 3,600 | MH | ||||||
| Overhead costs | $ | 730,000 | $ | 590,000 | ||||||
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| Data for two special order parts to be manufactured by the company in 2011 follow: |
| Part A27C | Part X82B | |||||||
| Number of units | 9,800 | units | 54,500 | units | ||||
| Machine hours | ||||||||
| Molding | 5,100 | MH | 1,020 | MH | ||||
| Trimming | 2,600 | MH | 650 | MH | ||||
| Direct labor hours | ||||||||
| Molding | 5,500 | DLH | 2,150 | DLH | ||||
| Trimming | 700 | DLH | 3,500 | DLH | ||||
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| Required | |
| 1. | Compute a departmental overhead rate for the molding department based on machine hours and a department overhead rate for the trimming department based on direct labor hours. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) |
| Department | Overhead rate |
| Molding | |
| Trimming | |
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| 2. | Determine the total overhead cost assigned to each product line using the departmental overhead rates from requirement 1. (Round your intermediate calculations to 2 decimal places and final answers to whole dollar amount. Omit the “$” sign in your response.) |
| Product | Molding | Trimming | Total overhead cost |
| Part A27C | |||
| Part X82B | |||
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| 3. | Determine the overhead cost per unit for each product line using the departmental rate.. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) |
| Product | Overhead cost |
| Part A27C | |
| Part X82B | |
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4.
Exercise 17-9 Using the plantwide Overhead rate to assess prices L.O. A1, P1
| Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. |
| Process | Activity | Overhead Cost | Driver | Quantity | |||
| Components | Changeover | $ | 500,000 | Number of batches | 800 | ||
| Machining | 279,000 | Machine hours | 6,000 | ||||
| Setups | 225,000 | Number of setups | 120 | ||||
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| $ | 1,004,000 | ||||||
| Finishing | Welding | $ | 180,300 | Welding hours | 3,000 | ||
| Inspecting | 210,000 | Number of inspections | 700 | ||||
| Rework | 75,000 | Rework orders | 300 | ||||
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| $ | 465,300 | ||||||
| Support | Purchasing | $ | 135,000 | Purchase orders | 450 | ||
| Providing space | 32,000 | Number of units | 5,000 | ||||
| Providing utilities | 65,000 | Number of units | 5,000 | ||||
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| $ | 232,000 | ||||||
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