ESSAY. Write your answer in the space provided or on a separate sheet of paper 2

Question

ESSAY. Write your answer in the space provided or on a separate sheet of paper 27) Parr Corporation makes three products, X, Y, and Z. Expected overhead costs for the con pegrecdation o y building Factory utility costs Supervisory salaries Factory supplies Total S 140,000 160,000 250,000 50,000 600 Parr uses direct labor hours as the cost driver to allocate overhead costs. Budgeted direct labor hours for each product are: Product X, 15,000 direct labor hours Product Y, 10,000 direct labor hours Product Z, 5,000 direct labor hours Required: 1) Determi 2) Assume per hour. Calculate the budgeted or expected cost of each unit of X. 28) Morris Company makes one product, and it expects to incur a total of S600,000 in indirect (overhead) costs ine the amount of manufacturing overhead that should be allocated to each of the three products that each unit of Product X requires $40 in direct materials and 3 direct labor hours at a rate of $15 during the current year. Production of the product for the year is expected to be: uarter Estimated production in units Required: 1) Calculate a predetermined overhead rate based on the number of units of product expected to be made during the current year. 2) Assuming that direct materials and direct labor costs are $10 and $15, respectively, determine the total cost per unit using the overhead rate you calculated in part (1).

Explanation / Answer

Solution for Question-27 Computation of Manufacturing Overhead per Hour Budgeted Overhead Cost $600,000 Total Direct Labour Hours 25000 (15000+10000+5000) Hence Manufacturing Overhead per Hour will be $24/Hour ($600000/25000 Hour) 1. Overhead Allocation to Product Detail Product X Product Y Product Z Direct labor hours 15000 10000 5000 Overhead rate $24.00 $24.00 $24.00 Overhead allocation $360,000 $240,000 $120,000 2. Computation Expected Cost of Product X Unit Particular Amount Direct Material $40.00 Direct Labour Hour (3 Hour x $15) $45.00 Manufacturing Overhead( 3 Hour x $24) $72.00 Total Cost /unit of Product X $157.00 Solution for Question-28 Computation of Manufacturing Overhead per Hour Indirect Overhead Cost $600,000 Total Estimated Product Unit 120000 (40000+15000+27000+38000) Hence Manufacturing Overhead per Unit will be $5/Unit ($600000/120000) 2. Computation Expected Cost per Unit Particular Amount Direct Material $10.00 Direct Labour Hour $15.00 Manufacturing Overhead $5.00 Total Cost /unit of Product X $30.00

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