The following information are given for Felix Corporation with regard to their t

Question

The following information are given for Felix Corporation with regard to their three products - Base, Modern and Super: Base 20,000 2,500 5,500 Modern Super Total 33,000 5,000 11,000 Number of units Machine hours Direct Labor hours Cost information Direct materials Direct labor Overhead allocated 10,000 3,000 1,500 2,500 1,000 3,000 $1,000,000 $550,000 $300,000 $1,850,000 125,000 100,000 150,000 $375,000 Machining Assembly Total overhead allocated Total costs Actual overhead incurred $1,000,000 $500,000 $1,500,000 $3,725,000 $1,490,000 Required: Using departmental overhead rate based on Machine hour for Machine department and Direct labor hour for Assembly department 1. Calculate total product cost for each of the Base, Modern and Super 2. Calculate unit product cost for each of the Base, Modern and Super 3. Prepare the necessary journal entries to adjust any over or under allocation of overhead assuming that the amount is immaterial (Round the overhead rate to 2 decimal points and round the costs to full number)

Explanation / Answer

Given that - Base Modern Super total Number of units 20000 10000 3000 33000 Machine hours 2500 1500 1000 5000 Direct labor hours 5500 2500 3000 11000 Cost information Direct material $                          1,000,000 $                        550,000 $                        300,000 $   1,850,000 Direct labor $                             125,000 $                        100,000 $                        150,000 $      375,000 Overhead allocation Machine $   1,000,000 Assembly $      500,000 Total overhead allocated $   1,500,000 Total cost $   3,725,000 Actual overhead incurred $   1,490,000 Overhead allocation rate for- Machine = total cost / Total machine hour = 1000000/5000 $        200.00 Assembly = total cost / Total labor hour = 500000/11000 $          45.45 Answer 1 Computation of total cost Base Modern Super total i Number of units 20000 10000 3000 33000 ii Machine hours 2500 1500 1000 5000 iii Direct labor hours 5500 2500 3000 11000 iv Direct material $                          1,000,000 $                        550,000 $                        300,000 $   1,850,000 v Direct labor $                             125,000 $                        100,000 $                        150,000 $      375,000 Overhead allocation vi=ii*200 Machine 500000 300000 200000 1000000 vii=iii*45.45 Assembly $                             249,975 $                        113,625 $                        136,350 $      500,000 ix Total cost $                          1,874,975 $                     1,063,625 $                        786,350 $   3,724,950 Answer 2 Computation of unit cost Base Modern Super total i Total cost $                          1,874,975 $                     1,063,625 $                        786,350 3725000 ii Number of units 20000 10000 3000 iii Unit cost                                     93.75                              106.36                              262.12 Answer 3 Overhead allocated = $                          1,500,000 Actual overhead = $                          1,490,000 Access overhead applied $                               10,000 Journal entry to adjust over applied overhead - Overhead account dr 10000 to Cost of good sold a/c 10000 (Adjusting entry for over applied overhead)

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