Complete parts 1 and 2 on notebook paper as part of your readiness work. Bring y

Question

Complete parts 1 and 2 on notebook paper as part of your readiness work. Bring your work to class to be handed in. In class, you will get a copy of this, we will review the answers to 1 & 2, and then we will complete this as part of class. Wiley Company produces lawn mowers. The deluxe model has a sturdier frame, a higher horsepower engine, a wider blade and mulching capability. The following estimates were repared at the beginning of the year Basic Model Deluxe Model Total Expected quantity 20,000 10,000 360 165 4,000 10,000 1,500 1,500 80 30,000 Selling price Direct labor and direct materials costs $ Machine hours 180 $ 80$ 6,000 20,000 2,500 500 20 10,000 30,000 4,000 2,000 100 Direct labor hours Number of inspections Engineering hours usec Number of equipment setups Ater research and computations, Wiley was able to split overhead costs into 4 pooled activities. and e 60,000 Equipment setups and material moves$ 270,000 $160,000 110,000 Quality control Occupancy costs Tota 600,000 Overhead costs for the year are as follows: 1. Determine a reasonable cost driver for each cost pool. Use machine hours for the Facility level pool (Occupancy costs) 2. Calculate an activity rate (overhead rate) for each cost pool. Label them clearly F4 F5 F6 F9 1O 3 5

Explanation / Answer

1 Maintenance and engeneering support Engeneering hours used Equipment setups and material movers Number of equipment setups Quality control Number of inspection Occupancy costs Machine hours 2 Total cost Cost driver Cost per driver Maintenance and engeneering support 60000 2000 30 Equipment setups and material movers 270000 100 2700 Quality control 160000 4000 40 Occupancy costs 110000 10000 11 600000

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