Exercises 11-1, 11-2, 11-7 & 11-15and Problems 11-2A
The management of Spring Meadow Dairy Company, described in Problem 11- 1A, now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows:
Blending Department $216,000
Packing Department 54,000
1. Determine the multiple production department factory overhead rates, using machine hours for the Blending Department and direct labor hours for the packing Department.
2. Determine the product factory overhead costs, using the multiple production department Rates (1)
Note Problem 11-1A to help the information for problem 11-2A:
Spring Meadow Dairy Company manufactures three products -whole milk, skim milk, and cream- in two production departments, blending the packing. The factory overhead for Spring Meadow is $270,000
The three products consume both machine hours in the two production departments as follows:
Direct Labor Hours
EX 11- 15The management of Kitchen Kraft Appliance Company in exercise 11-14 has asked you to use activity based costing to allocate factory overhead costs to the two products. You have determined that $45,000of factory overhead from each of the production department can be associated with setup activity (90,000in total). Company records indicate that blenders required 120 setups, while the toaster oven required only 60 setups. Each product has a production volume of 5,000units
a. Determine the three activity rates (assembly, test and pack, and setup)
Determine the total factory overhead and factory overhead per unit allocated to each product.
Note the information of exercise 11-14 if you need it am (I just need answer for question 11-15)
Kitchen Kraft appliance company manufactures small kitchen appliances. The product line consists of blenders and toaster ovens. Kitchen Kraft presently uses multiple production deep [ardent factory overhead rate method. The factory overhead as follows:
Assembly department 94,000
Test and pack department 64,000
The direct labor information for the production of 5,000 units of each product is as follows:
Test and pack department
Exercise 11-7 the management of Hercules Engines Inc. Manufactures gasoline and diesel engines through two production department, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plant wide factory overhead rate for allocating factory overhead to the two products. However management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for power torque
Fabrication Department factory overhead $560,000
Assembly Department factory overhead 240,000
Direct labor hours were estimated as follows:
Fabrication Department 4,000 hours
Assembly department 4,000
Total 8,000 hours
In addition, the direct labor hours (Ditch) used to produce unit of each product in each department were determined from engendering recurs as follows:
Direct labor hours per unit
a. determine the per unit factory overhead allocated to the gasoline and diesel engines under the single plantwide factory overhead rate method, using direct labor hours as activity base
b. Determine the per unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct labor hours as the activity base for each department.
C. recommended to management a product costing approach, based on your analyses in (a) and (b) support your recommendation.
Ex 11-2 River city Band instruments Inc. Makes three musical instruments , trumpets, tubas, and trombones. The budgeted factory overhead cost is $140,220. Factory overhead is allocated to the three products on the basis of direct labor hours. The product have the following budgeted production volume and direct labor hours per unit.
Budgeted production volume
Direct labor hours per unit
a. determine the single planwide factory overhead rate
b. use the factory overhead rate in( a) determine the amount of total and per unit factory overhead allocated to each of the three products
Ex 11-1 Spacely Sprocket and Gear company's fabrication Department incurred $150,000 of factory overhead cost in producing gears and sprockets. The two products consumed a total of 5,000 direct machine hours. Of that amount, sprockets consumed 2,200 direct machine hours.
Determine the total amount of factory overhead that should be allocated to sprockets.
Managerial Accounting, 10th Edition
Carl S. Warren, University of Georgia
James M. Reeve, University of Tennessee
Jonathan E. Duchac, Wake Forest University