IMAGE (A)CategoryUnitBatchProductFacilityTotal PooledCostTypes of Costs$ 388,000 Indirect labor wages, supplies, factory utilities, machinemaintenance215,400 Materials handling, inventory storage, labor for setups,packaging, labeling and shipping, schedulingResearch and development112,600307,000Machine hoursCost DriverNumber of production ordersTime spent by research departmentRent, general utilities, maintenance, facility depreciation, Square footageadministrative salariesIMAGE (B)Direct materials costDirect labor costNumber of labor hoursNumber of machine hoursNumber of production ordersResearch and development timeNumber of unitsSquare footageType of ProductTotal CostCost per Unita Commerciala. Homea. MiniatureCombined total$0b. Commercialb. Homeb. MiniatureCombined total$0Commercial$25.07 per unit$ 10.35 per hour6,00010,000HomeMiniatureTotal$15.07 per unit$ 8.35 per hour$12.07 per unit$9.35 per hour12,0002,00045,00025,0002002,00080020,00080,0003,00010%20%70%15,00020,00045,00050,00014,00030,000100%74,000100,000

Under single overhead rate of allocation, the total overhead cost is divided by the common cost…

IMAGE (A) Category Unit Batch Total Pooled Cost $ 388,000 215,400 Product Facility 112,600 307,000 Types of Costs Indirect labor wages, supplies, factory utilities, machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Machine hours Cost Driver Number of production orders Time spent by research department Rent, general utilities, maintenance, facility depreciation, Square footage administrative salaries IMAGE (B) Number of machine hours Direct materials cost Direct labor cost Number of labor hours Number of production orders Number of units Square footage 6,000 10,000 Commercial $ 25.07 per unit $ 10.35 per hour Home $ 15.07 per unit $ 8.35 per hour 12,000 45,000 Miniature $12.07 per unit $ 9.35 per hour 2,000 25,000 200 2,000 800 Research and development time 10% 20% 70% 15,000 20,000 45,000 50,000 14,000 30,000 Type of Product Total Cost Cost per Unit a Commercial a Home a. Miniature Combined total $ b. Commercial b. Home b. Miniature Combined total $ Total 20,000 80,000 3,000 100% 74,000 100,000

IMAGE (A) Category Unit Batch Total Pooled Cost $ 388,000 215,400 Product Facility 112,600 307,000 Types of Costs Indirect labor wages, supplies, factory utilities, machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Machine hours Cost Driver Number of production orders Time spent by research department Rent, general utilities, maintenance, facility depreciation, Square footage administrative salaries IMAGE (B) Number of machine hours Direct materials cost Direct labor cost Number of labor hours Number of production orders Number of units Square footage 6,000 10,000 Commercial $ 25.07 per unit $ 10.35 per hour Home $ 15.07 per unit $ 8.35 per hour 12,000 45,000 Miniature $12.07 per unit $ 9.35 per hour 2,000 25,000 200 2,000 800 Research and development time 10% 20% 70% 15,000 20,000 45,000 50,000 14,000 30,000 Type of Product Total Cost Cost per Unit a Commercial a Home a. Miniature Combined total $ b. Commercial b. Home b. Miniature Combined total $ Total 20,000 80,000 3,000 100% 74,000 100,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 23E: Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating...

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