there is 3 parts....A...B...C cDezto.mheducation.com/hmtpx?-=0.842124474 1560242

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there is 3 parts....A...B...C

cDezto.mheducation.com/hmtpx?-=0.842124474 1560242-1461438591 386 Colege Supply Company (CSC) makes three types of drinking glasses short, medium, and tall. It pres applies overhead using a predetermined rate based on direct labor hours A group of company emplo recommended that CSC switch to activity based costing and identified the following activities, cost driv estimated costs, and estimated cost driver units for Year 5 for each activity center Estimated Cost Driver Units 110 runs 200 orders 7 000 pounds Recommended Cost Driver Estimated Setting up production Processing orders Handling materials Using machines Providing quality management Packing and shipping Number of production runs Number of orders Pounds of materials Machine-hours Number of inspections Units shipped 33,000 48,000 19 600 48,000 55,800 8,000 nours 45 inspections 38,00019.000 units $242.400 in addition, management estimated 2 100 direct labor-hours for year 5 Assume that the tollowing cost driver volumes occurred in February year 5 Short Medium Tall

Explanation / Answer

a)

We are given cost of overheads and associated cost drivers . by dividing costs with their respective cost drivers we found out allocation rate per cost driver. For Direct labor hour Total overheads are considerd as in absorbtion costing all overheads are absorbed at single cost factor ( eg. Directr labor hour) We are given 2100 hours as direct labor hours

b) Production cost for each product considering labor hour rate as base for overheads we observe

18752

c) All calculations have been duly provided in brackets for you understanding

a) Predetermined overhead rate Activity Cost Cost driver units Allocation Rate Setting up production 33000 110 runs 300 per run Processing orders 48000 200 orders 240 per order Handling Materials 19600 7000 pounds 2.8 per pound Using Machines 48000 8000 hours 6 per hour Performing quality management 55800 45 inspections 1240 per inspection Packing & shipping 38000 19000 units 2 per unit Direct labor hour rate 242400 2100 hours 115.43 per hr

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