Exercise 17-5 (Part Level Submission) Perdon Corporation manufactures safes-larg

Question

Exercise 17-5 (Part Level Submission) Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead Walk-in Safes Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line Mobile Safes 200 290 450 810 220 360 1,710 (a) Your answer is correct. Collapse question part The total estimated manufacturing overhead was $273,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g 12.25.) (1) One mobile safe 438.75 per unit (2) One walk-in safe 4410 per unit

Explanation / Answer

b Materials handling activity rate = 163000/(290+220)= 319.61 One mobile safe One walk in safe Material handling cost assigned 92687 70314 Units 200 42 Material handling cost per unit 463.43 1674.14 Note: If amounts are rounded off, Material handling cost per unit for walk in safe will be $1674.15

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