Question#1. Whitley, Inc. uses ABC for allocating MOH. They have identified thre
ID: 2547504 • Letter: Q
Question
Question#1.
Whitley, Inc. uses ABC for allocating MOH. They have identified three activities.
One batch of cookies takes:
2 direct labor hours
1 machine hour
10 boxes (box size is 9X6X2)
How much manufacturing overhead should be charged to the batch of cookies?
Question #2.
Lou Marinaro worked 44 hours last week on the assembly line for Breakbad Manufacturing doing the following:
Monday - 3 hours on the line; 5 hours idle due to equipment malfunction
Tuesday - 8 hours on the line
Wednesday - 8 hours on the line
Thursday - 12 hours on the line (4 of the hours are considered overtime)
Friday - 8 hours on the line.
He worked the overtime on Thursday to help the company catch up on production. They were behind because of Monday's equipment malfunction.
Marinaro makes $40 per hour and is paid $60 an hour for overtime. How much of his compenstion should be debited to MOH?
Activity Activity Measure Activity Rate Mixing Direct labor hours $15 per DLH Baking Machine hours $10 per MH Packaging Box size $.05 per cubic inchExplanation / Answer
Answer to Question 1:
Manufacturing Overhead for 1 Batch of cookies:
Mixing cost : $ 15 per DLH : $ 15 x 2 DLH = $ 30
Baking Cost: $ 10 per MH: $ 10 x 1 MH = $ 10
Packaging Cost: $ 0.05 per cubic inch: $ 0.05 x 108 cubic inches x 10 boxes = $ 54
Total Manufacturing OH = $ 94
Answer to Question 2:
Normal hours of work = 3 hrs + 8 hrs x 4 days = 35 hours
Overtime = 4 hours.
Normal wages = 35 hours x $ 40 = $ 1,400
Overtime wages = 4 hours x $ 60 = $ 240
Total compensation of Lou Marinaro which should be debited to MOH is $ 1,640.
Hope this is helpful.
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