Shyllel Company manufactures dining chairs and tables. The following information

Question

Shyllel Company manufactures dining chairs and tables. The following information is available: Dining Tables Total Chairs Cost Machine200 600 $48,000 setups Inspections 250 470 S72,000 Labor2,600 2,400 hours Hayward is considering switching from one overhead rate based on labor hours to activity-based costing Instructions Perform the following analyses for these two components of overhead (a) Compute total machine setups and inspection costs assigned to each product using a single overhead ra (b) Compute total machine setups and inspection costs assigned to each product using ACTIVITY-BASED COSTING (c) Comment on your findings

Explanation / Answer

Req a: Pre-determined OH rate per Labour hour: Total estimated overheads (48000+72000) 120000 Divide: Total Labouor hours (2600+2400) 5000 OH rate per DLH 24 Overheads allocated: Dining chairs Tables Overheads allocated 62400 57600 (@ 24 per dlh) Req b: Activity rate: Cost Driver OH rate perr driver Machine setup 48000 800 60 per setup Inspections 72000 720 100 per inspection Activity cost allocated: Activity    Activity rate Dining chairs Tables Activity OH cost Activity OH cost Machine setup 60 200 12000 600 36000 Inspection 100 250 25000 470 47000 TOTAL OVERHEADS 37000 83000 Req c: Activity based costing is more improved and accurate method of allocation of overheads.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.