Schel Company manufactures automobile floor mats. It currently has two product i

Question

Schel Company manufactures automobile floor mats. It currently has two product ines, the Standard and the Deltuxxe. Schell has a total of s26,040 in ovethead it currently uses a traditionalcost system with overhead applied to the product following information about possible cost drivers and its two product lines on the basis of elther labor hours or machine hours. Schell has complied Consumed by by 1,050 labor hours 7.230 machine hours 680 labor hours 3,070 machine hours 370 laber hours 4,160 machine hours Required the amount of overhead assigned to each product line (Round activity rates to 4 decimal as the cost driver. Determine 1. Suppose Schel uses a tradtional costing system with direct labor hours places and final answers to 2 decimal places.) Standard Floor Mat Deluxe Floor Mat the amount of overhead assigned to each product line (Round activity rates to 4 decimal 2. Suppose Schell places and final answers to 2 decimal places uses a tradtional costing system with machine hours as the cost driver Determine Standard Floor Mat Deluxe Floor Mat

Explanation / Answer

1.

Working:

Activity rate = Total overheads/Total direct labor hours = $26040/1050 = $24.8000 per direct labor hour

Overhead assigned:

Standard Floor Mat: 680 x $24.8000 = $16864.00

Deluxe Floor Mat: 370 x $24.8000 = $9176.00

2.

Working:

Activity rate = Total overheads/Total direct labor hours = $26040/7230 = $3.6017 per machine hour

Overhead assigned:

Standard Floor Mat: 3070 x $3.6017 = $11057.22

Deluxe Floor Mat: 4160 x $3.6017 = $14983.07

Overhead Assigned Standard Floor Mat $16,864.00 Deluxe Floor Mat $ 9,176.00

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