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ID: 2339811 • Letter: V

Question

v2. CengageNOWwv2 1 Online teaching and Upgrade to macOS High Sierra Enjoy the latest technologies and refinements to your favorite apps Instal #03 eBook Calculator Details 2 ALGO Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Setting up equipment $494,100 Number of setups Ordering costs Machine costs Receiving Deoro produces two models of dishwashers with the following expected prime costs and activity demands 4.ALGO 6.ALGO Expected Cost Activity Driver Activity Capacity 610 18,300 42,100 8,600 ALGO 384,300 715,700 301,000 Number of orders Machine hours Receiving hours 4 ALGO 6.ALGO Model A Model B 1. ALGC 32 ALGO 38 ALGO 04.08 Direct materials Direct labor Units completed Direct labor hours Number of setups Number of orders Machine hours Receiving hours The company's normal activity is 7,400 direct labor hours $614,000 $451,000 16,600 5,400 430 6,700 24,100 2,300 $784,000 $481,000 7,500 2,000 180 11,600 18,000 6,300 quired 1. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest Previous Next Check My Work ess: 7/11 items for Grading All work saved nt Score: 49.26%

Explanation / Answer

(1)

Model A

Model B

Direct Materials

614000

784000

Direct Labour

451000

481000

Overhead

(256.09 * 5400)

=1382886

(256.09 * 2000)

=512180

Total Cost    (A)

2447886

1777180

Units completed (B)

16600

7500

Unit Cost    (A/B)

147.46

236.96

*O/H Rate using Direct Labour Hrs = Total Overhead cost / Total Labour Hrs

     = (494100 + 384300 + 715700 + 301000) / (5400 + 2000)

   = 1895100/7400 = $256.09 per hour

(2)

Model A

Model B

Direct Materials

614000

784000

Direct Labour

451000

481000

Overhead:

Setting up Equipment

(494100/610) * 430

=348300

(494100/610) * 180

=145800

Ordering cost

(384300/18300) * 6700

=140700

(384300/18300) * 11600

=243600

Machine cost

(715700/42100) * 24100

=409700

(715700/42100) * 18000

=306000

Receiving

(301000/8600) * 2300

=80500

(301000/8600) * 6300

=220500

Total Cost    (A)

2044200

2180900

Units completed (B)

16600

7500

Unit Cost    (A/B)

123.14

290.79

(3) Four Activity Driver is the more accurate method

Model A

Model B

Direct Materials

614000

784000

Direct Labour

451000

481000

Overhead

(256.09 * 5400)

=1382886

(256.09 * 2000)

=512180

Total Cost    (A)

2447886

1777180

Units completed (B)

16600

7500

Unit Cost    (A/B)

147.46

236.96