Several years after reengineerng its prouudion process, Zppy Corporation hired a
ID: 2329778 • Letter: S
Question
Several years after reengineerng its prouudion process, Zppy Corporation hired a new controller Data Table ed a plantwide ata for the Denise French. (Click the lcon to view adational information) For the upcoming year, Zppy's budgeted ABC manufactuing overhead allocation rales aro a EEE (Cick the loon to view the addtional data) folows Standard Delaxe 6.0 Pars per wh Setupe per 1,000 wheais Finishing direct labor hours per wheel Total direct labor hours per wheel 8.0 200 20.0 1.5 3.5 3.8 Requirement 1. Compute the total budge id manufacturing overteed cost for the upooming year (Enter the Zippy Corporation Total Budgeted Indirect Manufacturing Costs 2.6 The company's managers expect to produce 1,000 units of each model Ouring the yew Budgeted Quantity ofActivity Cost Cost Allocation Base Allocation Rate Indirect Cost Total Budgeted Activity 14,000 3.00 42,000 Print Done Materials handing Machine setups Insertion of parts Finibhing Total budgeted indirect cost 350.00 24.00 40 4,000 36,000 More Info 14,000 56.00 3585400 She developed an ABC syssam very similar to the one used by ippy's chiet iv Part of the reason French developed the ABC system was because Zooy's prolits had been decining even though the company had shited its product mix toward re product that had appeared most profitable under the old syshem. Before adopting the now ABC system the company had used a plantwide overhead rala based on direct labor hours that was developed years ago l and then click Check AnswerExplanation / Answer
(1) Total Budgeted Manufacturing O/H cost :-
Activity
Budgeted Quantity of Cost Allocation Base
Activity Cost Allocation Rate
Total Budgeted Indirect Cost
Materials Handling
14000
3
42000
Machine Setup
40
350
14000
Insertion of Parts
14000
24
336000
Finishing
(1000 * 1.5) + (1000 * 3.5)
=5000
56
280000
Total Budgeted Indirect Cost
672000
(2) Manufacturing O/H cost per wheel of each model using ABC :-
Standard
Deluxe
Materials Handling
(6000 * 3)
=18000
(8000 * 3)
=24000
Machine Setup
(350 * 20)
=7000
(350 * 20)
=7000
Insertion of Parts
(6000 * 24)
=144000
(8000 * 24)
=192000
Finishing
(1500 * 56)
=84000
(3500 * 56)
=196000
Total Manufacturing Cost (A)
253000
419000
Units Produced (B)
1000
1000
Manufacturing O/H cost per wheel (A/B)
253
419
(3) Traditional Plantwide O/H Rate = Total Overhead cost / Total Direct Labour Hrs
Total Direct Labour Hrs = (1000 * 2.6) + (1000 * 3.8) = 6400 Hrs
= 672000/6400 Hrs = $105
Standard
Deluxe
Total Manufacturing Cost (A)
(2600 Hrs * 105)
=273000
(3800 Hrs * 105)
=399000
Units Produced (B)
1000
1000
Manufacturing O/H cost per wheel (A/B)
273
399
Activity
Budgeted Quantity of Cost Allocation Base
Activity Cost Allocation Rate
Total Budgeted Indirect Cost
Materials Handling
14000
3
42000
Machine Setup
40
350
14000
Insertion of Parts
14000
24
336000
Finishing
(1000 * 1.5) + (1000 * 3.5)
=5000
56
280000
Total Budgeted Indirect Cost
672000
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