Tackett makes handhold calculations in two models-models-basic and professional.
ID: 2473394 • Letter: T
Question
Tackett makes handhold calculations in two models-models-basic and professional. Tackett estimated $1,149,500 of manufacturing overhead and 805,000 machine hours for the year. The basic modal actually consume 280,000 machine hours and the professional model consumed 325,000 machine hours. Tackett wants to refine its costing system by allocating overhead using departmental rabes. The estimated $1,149 of manufacturing overhead has been divided into two cost pods-Assembly Department and Packaging Department, The following data have been compiled:Explanation / Answer
Assembely Packaging
Overhead Cost 600,000 489,500
Machine hours
Basic 184,000 96,000
Professional 116,000 209,000
Total hours 300,000 305,000
1) Predetermined Overhead Allocation rate
Estimated Over head Cost / Estimated Qty of Allocation base = Predetermined OH Allocation rate
Assembly 660,000 / 300,000 = $2.20 per hour
Packaging 489,500 / 305,000 = $ 1.60492 per hour
2) Allocation of Cost
Basic Professional
Assembly 404,800 ( $2.20 X 184,000) 255,200 ( $2.20 X 116,000)
Packaging 154,072 ( $1.60492 X 96,000) 335,428 ($ 1.60492 X 209,000)
Total $ 558,872 $ 590,628
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