1. Compute the manufacturing overhead allocated to each customer in 2015 using t

Question

1. Compute the manufacturing overhead allocated to each customer in 2015 using the simple costing system that uses machine-hours as the allocation base.
2.compute the manufacturing overhead allocated to each customer in 2014 using department-based manufacturing overheard rates.
3. Comment on your answers in requirements 1&2. Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates are used to price contracts, which customers will be unhappy?
4.how else might ap use the info available from its department by department analysis of manufacturing overhead costs?

Explanation / Answer

1) Manufacturing overhead rate = $308,600/ 4000 machine hours

                                                     = $77.15 per hours

Cost allocted

2 )Overhead rate

Cost allocated to customers

3)united motors will be the unhppiest of all follwed by Leland Auto . We need to expalin them that costs are allocated based on their usage of activities hence reasonable

4) the infirmation can be used for decision making and control prurpose

5) since the costs are already refined into cost drivers

united motors 120 *77.15 $9,258 Holden motors 2800*77.15 $216,020 Leland Auto 1080*77.15 $83,322

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