Problem 7-20 Swifty Visuals produces tablets and books. Total overhead costs tra
ID: 2517247 • Letter: P
Question
Problem 7-20 Swifty Visuals produces tablets and books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After CES implementing activity-based costing, managers determined the following cost pools and cost drivers. They aliso decided that general costs should no Ass Department 16 Activity Pool Costs Cost Driver Nümber of units Machine hours Binding Printing Product design General $232,254 Study 808,956 173,880Change orders 632,178 None Total overhead costs $.,047.2680 Other information is as follows Tablets Books Units Direct materials cost per unit Direct labor cost per unit Direct labor hours Machine hours Change orders 62,600 20,200 $3.09 $10.34 $4.08$7.88 25,300 16,100 127.000 121,000 1,500 2,800 Calculate predetermined OH rate. (Round answer to 2 decimal places, e.g. 1s.25.Explanation / Answer
Req 1 Pre-determined OH rate: Estimated OH / Estimated DLH 1847,268/ (25300+16100)DLH = $ 44.62 per DLH Req Overhead assigned Tablet Books labour hours 25300 16100 OH rate 44.62 44.62 OH assigned 1128886 718382 Divide: Number of units 62,600 20,200 OH cost per unit 18.03 35.56 Unit cost: tablet Book Material 3.09 10.34 Labour 4.08 7.88 Oh 18.03 35.56 Total Unit cost 25.2 53.78 Req 3: STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity ACTIVITY COST POOL Measures Overheads Activity Rate Binding Units 232,254 82,800 2.81 Printing MH 808,956 248,000 3.26 product Design Change orders 173,880 4,300 40.44 Overeads assigned Tablet books Activity rate Activity OH Activity OH Binding 2.81 62,600 175,906 20,200 56,762 Printing 3.26 127000 414,020 121000 394,460 product Design 40.44 1,500 60,660 2,800 113,232 Total OH 650586 564,454 Number of units 62600 20,200 OH cost per unit 10.39 27.94 Req 4: Unit cost: tablet Book Material 3.09 10.34 Labour 4.08 7.88 Oh 10.39 27.94 Total Unit cost 17.56 46.16 Req 5: Traditional ABC Difference Total Overheads allocated 1847268 1216040 631228