T-Mobile 5:23 PM Messages Exercise 3 Fischer Company identified the following ac
ID: 2537575 • Letter: T
Question
T-Mobile 5:23 PM Messages Exercise 3 Fischer Company identified the following activities, costs, and activity drivers xpected Costs Expected Activit ctivi Handling parts Inspecting product Processing purchase orde Designi S425,000 25,000 parts in stoc S390,000940 batches S220,000440 orders 5 models ckagin $230,000 a. Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals) b. Compute separate rates for each of the four activities using the activity-based costingExplanation / Answer
Exercise 3)
a) Total Estimated cost = $425,000+$390,000+$220,000+$230,000
= $1,265,000
Budgeted Direct Labor Hours = 70,000 hours
Plant Overhead rate based on labor hours = Total Estimated cost/Budgeted Direct Labor Hours
= $1,265,000/70,000 = $18.07 per hour
b) Calculation of separate rate for each activity (Amount in $)
Exercise 2)
Calculation of equivalent units for June
Therefore the equivalent units for direct material is 43,100 units and equivalent units for direct labor and overhead is 44,150 units.
Workings:
1) The beginning work in process inventory is completed with respect to material for 70%, it means in the month of june remaining 30% of it is completed. The product started and completed are 100% completed in June. Ending work in process inventory is completed with respect to material for 40% in June.
2) The beginning work in process inventory is completed with respect to labor and overhead for 25%, it means in the month of june remaining 75% of it is completed. The product started and completed are 100% completed in June. Ending work in process inventory is completed with respect to labor and overhead for 10% in June.
Activity Expected Costs (A) Expected Activity (B) Rate (A/B) Handling Parts 425,000 25,000 parts 17 per part Inspecting Product 390,000 940 batches 414.89 per batch Processing purchase orders 220,000 440 orders 500 per order Designing packaging 230,000 5 models 46,000 per modelRelated Questions
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