Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 24 Jul 2017 My Price 12.00

Idaho Mechanical Systems

(Plant vs. departmental OH rates) Idaho Mechanical Systems has two departments: Fabrication and Finishing. Three workers oversee the 25 machines in Fabrication. Finishing uses 35 crafters to hand-polish output, which is then run through buffing machines. Product CG9832-09 uses the following amounts of direct labor and machine time in each department:

 

Fabrication

Finishing

Machine hours

10.00

0.30

Direct labor hours

0.02

2.00

Following are the budgeted overhead costs and volumes for each department for the upcoming year:

 

Fabrication

Finishing

Budgeted overhead

$635,340

$324,000

Budgeted machine hours

72,000

9,300

Budgeted direct labor hours

4,800

48,000

a. What is the plantwide OH rate based on machine hours for the upcoming year? How much overhead will be assigned to each unit of Product CG9832-09 using this rate?

b. Idaho Mechanical’s auditors inform management that departmental predetermined OH rates using machine hours in Fabrication and direct labor hours in Finishing would be more appropriate than a plantwide rate. What would the OH rates be for each department? How much overhead would have been assigned to each unit of Product CG9832-09 using departmental rates?

c. Discuss why departmental rates are more appropriate than plantwide rates for Idaho Mechanical.

Answers

Maurice Tutor
(5)
Status NEW Posted 24 Jul 2017 12:07 AM My Price 12.00

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