Altex Inc. manufactures two products: car wheels and truck wheels. To determine
ID: 2420567 • Letter: A
Question
Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information.
Car
Truck
Total estimated overhead costs for the two product lines are $814,920.
A.) Calculate overhead rate
B.) Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs.
Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheel product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs.
-------------------------------------------------------------------------------------------------------------------------------------------------------
Activity Cost Pools
Expected Use of
Cost Drivers
Estimated Overhead
Costs
Compute the activity-based overhead rates for these three cost pools.
---------------------------------------------------------------------------------------------------------------------------
Compute the cost that is assigned to the car wheels and truck wheels product lines using an activity-based costing system, given the following information.
Expected Use of Cost Drivers per Product
Car
Truck
PLEASE ANSWER ALL QUESTIONS!!
Car
Truck
Estimated wheels produced 39,530 13,000 Direct labor hours per wheel 1 3Explanation / Answer
1-overhead rate = estimated overhead = 814920 no of wheels produced = 52530 =814920/52530 = 15.51
2-labour hour required to produce 1 car wheel is 1hr total labor hour = 39530
labour hour required to produce 1 truck wheel is 3hr total labor hour = 13000*3 = 39000
total labor hours = 69530
allocation of overhead to car wheels = (814920/69530)*39530 = 463307.74
overheads to truck wheels = (814920/69530)*39000 = 457095
answer 2 setting up machines assembling inspection allocation of overhead 220000 314120 280800 expected use of cost derivers 1000 78530 1200 activity based overhead rates 220 4 234 answer 3 car trucks allocation of overhead car truck no of set up 200 800 setting up machines 220000 44000 176000 labor hours 39530 39000 assembling 314120 178587.1365 176192.72 no of inspection 100 1100 inspection 280800 23400 21450 total over heads 245987.1365 373642.72Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.