4. The controller for Wolfe Machining has established the following overhead cos

Question

4. The controller for Wolfe Machining has established the following overhead cost pools and cost drivers: Budgeted Overhsad Cost Cost Driver Machine setups Material handling Quality control inspection Other overhead costs Total Number of setups Units of raw material Number of inspections Machine hours $240,000 90,000 48,000 $538,000 Budgeted Level Machine setups Material handling Quality control Other overhead for Cost Driver 200 setups 60,000 units 1,200 inspections 20,000 machine hours Pool Bate S1,200 per setup $1.50 per unit S40 per inspection S8 per machine hour Order no. 715 has the following production requirements: Machine setups: 7 Raw material: 11,200 units Inspections: 16 Machine hours: 850 Required A. Compute the total overhead that should be assigned to order no. 715 by using activity-based costing B. Suppose that Wolfe were to use a single, predetermined overhead rate based on machine hours. Compute the rate per hour and the total overhead assigned to order no. 715. C. True or False: Using activity-based costing system rather than traditional costing system decreases total overhead costs.

Explanation / Answer

Answer = A CCOMPUTATION TOTAL OVERHEAD COST WITH ACTIVITY-BASED COSTING METHOD Overhead Cost Pool Number of Pool Pool Rate Overhead Cost Machiene Set-Ups 7 1200 8400 Raw Materials 11200 1.5 16800 Inspections 16 40 640 Machine Hours 850 8 6800 Total Overhead Cost = 32640 Answer = B) Calculation of the overhead recovery based on the machiene Hours Recovery Rate = Total Overhead / Total Machine Hours Recovery Rate =$ 538,000 / 20,000 Machiene Hours Recovery Rate = $ 26.90 Per Machine Hours Overhead Cost as per Traditional Method = 850 Machien Hours X $ 26.90 Overhead Cost as per Traditional Method = $ 22,865 Answer =C Using the Activity - Based Costing rather then traditional costing sysytem total cost may be increase or decrease So, Answer = False

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.