Chapter 4 Problem Number 4 The following information applies to the questions di

Question

Chapter 4 Problem Number 4

The following information applies to the questions displayed belowJ Craft Pro Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its compony records Production Activity Grinding Indirect Labor Indirect Materials Other Overheod 330,000 400,000 520,000 S 210,000 Product modification Providing power System calibration $ 250,000 Additional information on the drivers for its production octivities follows. Grinding 13,000 machine hours 13,000 machine hours Product modification Providing power System calibration 1,300 engineering hours 13,000 direct labor hours 250 batches Job 3175 Job 4286 2,375 units 4,500 MH 190 Number of units units Mochine hours Engineering hours Batches 450 MH 33 eng.hours 25 batches 26 eng.hours 75 batches 4,320 Direct labor hours 480 DLH DLH

Explanation / Answer

(a) (b) (c) (d) (e) Product DL hours Plantwide OH rate Total overhead cost units produced OH cost per unit (a) X (b) (c) / (d) Job 3175            480 $ 131.54 $    63,138      190 $   332 Job 4286        4,320 $131.54 $ 5,68,246 2,375 $   239 Computation of plantwide overhead rate based on Direct labor hours: Indirect labor = $    12,50,000 Indirect materials = $      2,10,000 Overheads = $      2,50,000 Total Overheads = $    17,10,000 Total Direct labor hours = 13,000 Overhead cost per unit = $          131.54

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