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Answer the following problem:
Solid Office Company manufactures two types of CHAIRS, Staff and Executive Chairs, Manufacturing overhead applied into production on the bases of direct labor hours.
The estimated manufacturing overhead is $800,000 and the estimated direct labor hours are 25000 hours.
Cost information is as follows:
Staff Chair Executive chair
Direct material cost $25 per unit $40 per unit
Direct labor cost 3 hours @ 12 per hour 4 hours @12 per hour
Budgeted volume 3000 4000
The Management is concerning to use ABC system.
Management identifies three activities:
1) Inspection hours.
2) Machine hours. And
3) Product shipment.
Data pertaining to those activities are as follows:
Staff chair Executive chair
Inspection hours 2000 8000
Machine hours 18000 H 22000 H
No of Shipments 300 Shipments 200 Shipments
Manufacturing overhead for the three activities are as follows:
Inspection hours. $90,000
Machine hours. And $560,000
Product shipment. $150,000
Requirements:
1) Under normal costing compute the Manufacturing overhead Per unit for both products?
2) Calculate the over or under applied overhead for both products if the estimated manufacturing overhead is attained?
3) Under ABC system compute the Manufacturing overhead per unit for both products?
Answer the following problem:
Solid Office Company manufactures two types of CHAIRS, Staff and Executive Chairs, Manufacturing overhead applied into production on the bases of direct labor hours.
The estimated manufacturing overhead is $800,000 and the estimated direct labor hours are 25000 hours.
Cost information is as follows:
Staff Chair Executive chair
Direct material cost $25 per unit $40 per unit
Direct labor cost 3 hours @ 12 per hour 4 hours @12 per hour
Budgeted volume 3000 4000
The Management is concerning to use ABC system.
Management identifies three activities:
1) Inspection hours.
2) Machine hours. And
3) Product shipment.
Data pertaining to those activities are as follows:
Staff chair Executive chair
Inspection hours 2000 8000
Machine hours 18000 H 22000 H
No of Shipments 300 Shipments 200 Shipments
Manufacturing overhead for the three activities are as follows:
Inspection hours. $90,000
Machine hours. And $560,000
Product shipment. $150,000
Requirements:
1) Under normal costing compute the Manufacturing overhead Per unit for both products?
2) Calculate the over or under applied overhead for both products if the estimated manufacturing overhead is attained?
3) Under ABC system compute the Manufacturing overhead per unit for both products?
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