University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

386

Pages:

2
Author:

stud_ice13

These problems compare methods of allocating overhead, like the plantwide rate, departmental rates, and activity-based costing (ABC). Below is a breakdown of each problem, with steps for completing them. Problem 17-1A: Comparing Plantwide Rate Method and ABC 1. Single Plantwide Overhead Rate Calculation: o Use the formula: Plantwide Overhead Rate=Total Budgeted Overhead Cost 2. Allocate Overhead Using Plantwide Rate: o Multiply the plantwide rate by the direct labor hours for each job. 3. Compute Activity Rates for ABC: o For each activity, calculate the rate using: Activity Rate=Total Cost for the Activity 4. Allocate Overhead Using ABC: o For each job, allocate overhead by multiplying the activity rate by each job’s usage of that cost driver. Problem 17-2A: Plantwide Overhead Rate and Gross Profit Calculation 1. Calculate Plantwide Overhead Rate: o Use the formula for plantwide overhead rate based on direct labor hours. 2. Compute Overhead Cost per Unit: o Multiply the plantwide rate by the direct labor hours per unit for Pup tents and Pop-up tents. 3. Compute Product Cost per Unit: o Sum the direct material, direct labor, and allocated overhead costs per unit. 4. Gross Profit per Unit: o Subtract the product cost per unit from the selling price per unit. Problem 17-3A: Activity-Based Costing, Product Cost, and Gross Profit 1. Compute ABC Activity Rates: o Find the rate for each activity using: Activity Rate=Total Activity Cost 2. Allocate Overhead Using ABC: o For Pup and Pop-up tents, multiply each activity rate by its actual usage for each product. 3. Compute Product Cost per Unit: o Add direct material, direct labor, and allocated overhead per unit. 4. Compute Gross Profit per Unit: o Subtract the product cost per unit from the selling price per unit. Problem 17-4A: Departmental Overhead Rate, Product Cost, and Gross Profit 1. Departmental Overhead Rates: o Use machine hours to allocate Fabricating costs and direct labor hours to allocate Assembly costs: Fabricating Rate=Fabricating Overhead 2. Allocate Overhead per Unit for Each Model: o Multiply each departmental rate by the actual usage of machine hours or direct labor hours for each model. 3. Compute Product Cost per Unit: o Sum direct materials, direct labor, and overhead for each model. 4. Compute Gross Profit per Unit: o Subtract the product cost per unit from the selling price per unit for each model. Problem 17-5A: Activity-Based Costing for a Service Company 1. Compute Activity Rates: o Calculate each activity rate based on its cost driver: Activity Rate=Activity Cost 2. Allocate Overhead to Surgery Units: o Multiply the activity rate by the actual usage for each surgery type (general and orthopedic). 3. Compute Overhead Cost per Patient: o Divide the total allocated overhead for each unit by the number of patients in that unit. For specific calculations or more detailed guidance on any of these problems, let me know which you'd like to dive into further!