11 Allocating overhead cost among products LO 12-3 Chandler Hats Corporation man

Question

11 Allocating overhead cost among products LO 12-3

Chandler Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour. Chandler expects to incur $644,000 of overhead costs during the next fiscal year. Other budget information follows.

Use direct labor hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product.

PRODUCTION ALLOCATION x WEIGHT = ALLOCATED COST

VOGUE

BEAUTY

GLAMOUR

TOTAL   

Use machine hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product.

PRODUCTION ALLOCATION x WEIGHT = ALLOCATED COST

VOGUE

BEAUTY

GLAMOUR

TOTAL   

5 How credit terms affect financial statements LO 7-5

Dodson Co. is planning to finance an expansion of its operations by borrowing $53,200. City Bank has agreed to loan Dodson the funds. Dodson has two repayment options: (1) to issue a note with the principal due in 10 years and with interest payable annually or (2) to issue a note to repay $5,320 of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is 10 percent for each option.

What amount of interest will Dodson pay in year 1? (Round your answers to nearest whole dollar amount.)

(1) UNDER OPTION 1 ( )

(2) UNDER OPTION 2 ( )

What amount of interest will Dodson pay in year 2? (Round your answers to nearest whole dollar amount.)

(1) UNDER OPTION 1 ( )

(2) UNDER OPTION 2 ( )

Chandler Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour. Chandler expects to incur $644,000 of overhead costs during the next fiscal year. Other budget information follows.

Explanation / Answer

Ans 12-3

Direct Labour hours Allocation   Vogue Beauty Glamour Total Direct Labour Hours               4,200.00              6,200.00            3,600.00      14,000.00 Allocation Rate                     46.00                    46.00                  46.00 Total OH cost         1,93,200.00        2,85,200.00      1,65,600.00 6,44,000.00 Machine hours Allocation   Vogue Beauty Glamour Total Machine Hours               2,000.00              2,200.00            2,240.00        6,440.00 Allocation Rate                   100.00                  100.00               100.00 Total OH cost         2,00,000.00        2,20,000.00      2,24,000.00 6,44,000.00

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

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