Question
Mets Products produces basebail caps and T-shirts Most of the production is done by machina Data on operations and costs for October follow Unns producod Machine hours used Direct labor-hours Direct materials costs 4900 15,800 1,770 320 11,700.100 18,800 54,000 2.400 $ 6400 19 745 10.900 970 200 800 120 Direct labor costs Manufacturing ovenead costs Management asks the Srm's cost accountant to compute product costs. The acoourtant first assigns overhead costs to two pools overhead related to drect matenals and averhead reliated to machine hours The analysis of averhead accounts by the cost accountant follows AmountRolatedo S 4,070 Maching-hours Account utiities Suppies Machine depreciation and manterance 58 Machne hours Purchasing and stonng matenals Miscellaneous 2 830 Materias 1870 Materials 3 420 Machino-hours Required (a) Compute the predstemined overhoad rales assoming that Mets Products uses machive-hours to (a) Compute the predetomined overhead rale alocate machinereatea overhead costs and materials costs to atocate mateials relsred overhead costs IRound your machine-related overhead rate to 2 decimal places. Enter your materials related overhead rate as a whole percentage lLe. 32))
Explanation / Answer
Answer:
a. Calculation of Overhead Allocation Rate:
Total Overheads related to Material = $ 2,830 + $ 1,870 = $ 4,700
Total Material Cost = $ 18,800
Therefore, Material related Overhead rate = $ 4,700 * 100 / $ 18,800 = 25% of the Material Cost.
Similarly,
Total Machine related Overheads = $ 4,070 + $ 7,555 + $ 3,420 = $ 15,045
Total Machine Hours = 1,770
Machine related Overhead Rate = $ 15,045 / 1,770 = $ 8.50 per machine hour.
b. Calculation of Total Cost and Cost per unit;
Particulars Baseball Caps T-Shirts Total Per Unit Total Per Unit Total Production Units(in units) 10,900 4,900 15,800
Costs of Production ( in $); Direct Material 1.0734 11,700 0.9592 4,700 18,800 Direct Labour 0.367 4,000 0.4898 2,400 6,400 Manufacturing Overheads; Material Related 0.2683 2,925 0.2398 1,175 4,100 Machine Related 0.7564 970 x 8.5 = 8,245 1.3877 6,800 15,045
Total Cost 2.4651 26,870 3.0765 15,075 41,945