there are 4 parts.... a... b...c...d.... I put multiply pics up... uezto.mheduca

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there are 4 parts.... a... b...c...d.... I put multiply pics up...

uezto.mheducation.com/hm.tpx?--0.3064 57043539495-1461467092361 Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM), and organized as a separate division within the company. Most manufacturing plants at MM use an ABC system, but UM has always used a tradtional product costing system. Bob Miller, the plant controller at UM has decided to experment with ABC and has asked you to help develop a simple ABC system that would help him decide rit was useful. The controller's staft has identified costs for the first month in the four overhead cost pools along with appropriate cost drivers for each pool: Costs Activity Drivers Incoming inspection $75,0o0 Directm Production inspection5 75,000 Direct material cost 650,000 250,000 Machine-hours Setups Shipping 40.000 Units shipped The company manufactures two basic products with model numbers 308 and 510 The following are data for production for the first month as part of MM: Products 08 510 Total direct labor coss Total machine hours s 24.000 $ 8000 $ 73 000 S: 89.000 50 000:80:000 Totat number ot setups 80

Explanation / Answer

(a)

Burden rate = (Total overhead costs / Budgeted total machine-hours)

Budgeted total machine-hours = 50,000+80,000 =130,000 hours

Total overhead costs = $75,000+650,000+250,000+140,000 = $1,115,000

Burden rate =$1,115,000 / 130,000 = $8.57 per machine-hour

(b)

(c)

(d)

If management implemented an activity-based costing system it should be provided with a more thorough understanding of product costs

308 510 Direct costs $97,000 $97,000 Overhead @ $8.57 per machine hour $428,500 $685,600 Total Cost $525,500 $782,600 Number of Units 20,000 8,000 Unit Cost $26.275 $97.825

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