Tackett makes handheld calculators in two models-basic and professional. Tackett
ID: 2410364 • Letter: T
Question
Tackett makes handheld calculators in two models-basic and professional. Tackett estimated $1,053,000 of manufacturing overhead and 585,000 machine hours for the year. The basic model actually consumed 160,000 machine hours, and the professional model consumed 425,000 machine hours. The predetermined overhead allocation rate using machine hours as the allocation base is $1.80 per machine hour, with the allocated overhead costs split between the basic model and the professional model by $288,000 and $765,000, respectively. ?(Click the icon to view the data using multiple department allocation rates.) (Click the icon to view additional data.) Read the requirements Requirement 1. Tackett expects to produce 175,000 basic models and 175,000 professional models. Compute the predetermined overhead allocation rates using activity-based costing. How much overhead is allocated to the basic model? To the professional model? Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity Abbreviation used: Qty : quantity. Enter the materials handling allocation rate to four decimal places, and the remaining allocation rates to the nearest cent) Predetermined OH Estimated overhead costs Estimated qty of the allocation base allocation rate Materials HandlingExplanation / Answer
Answer 1.
Calculation of Predetermined OH Rate:
Materials Handling = Estimated Overhead Costs / Estimated Quantity of the allocation base
Materials Handling = $42,000 / 96
Materials Handling = $437.50 per part
Machine Setup = Estimated Overhead Costs / Estimated Quantity of the allocation base
Machine Setup = $423,000 / 60
Machine Setup = $7,050 per setup
Insertion of Parts = Estimated Overhead Costs / Estimated Quantity of the allocation base
Insertion of Parts = $588,000 / 96
Insertion of Parts = $6,125 per part
Calculation of allocated OH:
Basic Model:
Allocated OH = $437.50 * 32 + $7,050 * 20 + $6,125 * 32
Allocated OH = $351,000
Professional Model:
Allocated OH = $437.50 * 64 + $7,050 * 40 + $6,125 * 64
Allocated OH = $702,000
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