Rizzo Manufacturing produces two types of cameras: 35mm and digital. The cameras
ID: 2499515 • Letter: R
Question
Rizzo Manufacturing produces two types of cameras: 35mm and digital. The cameras are produced using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows.
Product
Machine Hours
Setups
Receiving Orders
Packing Orders
35mm
10,000
100
200
400
Digital
10,000
250
800
2,000
Costs
$60,000
$40,000
$8,000
$24,000
Calculate the total overhead assigned to the 35mm cameras using packing orders to calculate a plantwide rate.
Rizzo Manufacturing produces two types of cameras: 35mm and digital. The cameras are produced using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows.
Product
Machine Hours
Setups
Receiving Orders
Packing Orders
35mm
10,000
100
200
400
Digital
10,000
250
800
2,000
Costs
$60,000
$40,000
$8,000
$24,000
Calculate the total overhead assigned to the 35mm cameras using packing orders to calculate a plantwide rate.
Explanation / Answer
Plant wide rate by taking Packing order as base
Plantwide rate = Total Cost / Total orders
= $132,000 / 2,400
= $55 per order
Total Cost = $ 60,000 + $ 40,000 + $ 8,000 + $24,000 = $ 132,000
Total Orders = 400 + 2,000 = 2,400 orders
Total over head Assigned to 35mm cameras using packing order as base
Over head = No. of packing orders of 35mm X Plantwide rate per order
= 400 X $ 55
= $ 22,000
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