Instructions Tristar Manufacturing produces two types of battery-operated toy so
ID: 2339190 • Letter: I
Question
Instructions Tristar Manufacturing produces two types of battery-operated toy soldiers: infantry and special forces. The soldiers are produced by using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows Product Machine Hours Setups Receiving Orders Packing Orders Infantry Special forces Costs 20,000 20,000 S80.000$24,000 1,600 800 $30,000 300 900 100 100 $18,000 Required: 1. Calculate the total overhead assigned to each product by using only machine hours to calculate a plantwide rate. (Round overhead rate answer to two decimal places and other answers to the nearest dollar.) 2. Calculate consumption ratios for each activity. (Round to two decimal places.) 3. Calculate a rate for each activity by using the associated driver. (Round to two decimal places.) 4. Assign the overhead costs to each product by using the activity rates computed in Requirement 3. 5. CONCEPTUAL CONNECTION: Comment on the difference between the assignment in Requirement 1 and the activity-based assignment.Explanation / Answer
1) Calculate Overhead Rate overhead Rate = total estimated cost/total machine hours Machine hour 80000 setups 24000 receiving order 18000 packing orders 30000 total estimated cost 152000 overhead rate = 152000/40000 = 3.80 per machine hours total overhead assigned to infantry product = 20000*3.80 = 76000 total overhead assigned to the special forces product = 20000*3.80= 76000 2) Calculation of Comsumption Ratio = activity of individual product/total activity Machine hrs Setups Receiving order Packing order infantry 0.5 0.75 0.9 0.67 special forces 0.5 0.25 0.1 0.33 3) Calculate Rate of each activity Machining 80000/40000 = 2 per machine hr setups 24000/400 = 60 per setup receiving 18000/1000 = 18 per receiving order packing 30000/2400 = 12.5 per packing ordr 4) Assigning the overhead cost Particulars Infantry Special Machining $ 40,000.00 $ 40,000.00 setup $ 18,000.00 $ 6,000.00 Receiving $ 16,200.00 $ 1,800.00 Packing $ 20,000.00 $ 10,000.00 total $ 94,200.00 $ 57,800.00 5) Activity based is based on actual activity & traditional system is based on only machine hours