The following information is provided for Orbit Antenna Corp., which manufactures two products: Lo-Gain antennas and Hi-Gain antennas for use in remote areas.
Activity Cost Allocation Base
Setup $ 58,000 Number of setups
Machine maintenance 30,000 Number of machine hours
Total indirect manufacturing costs $ 88,000
Lo-Gain Hi-Gain Total
Direct labor hours 1,200 3,800 5,000
Number of setups 40 40 80
Number of machine hours 3,000 2,000 5,000
Orbit Antenna plans to produce 125 Lo-Gain antennas and 225 Hi-Gain antennas.
2. Compute the ABC indirect manufacturing cost per unit for each product.
Per unit Indirect cost
For Lo-Gain: $376
For Hi-Gain: $182.22
The Oakman Company manufactures products in two departments: Mixing and Packaging. The company allocates manufacturing overhead using a single plantwide rate with direct labor hours as the allocation base. Estimated overhead costs for the year are $810,000, and estimated direct labor hours are 360,000. In October, the company incurred 20,000 direct labor hours.
1. Compute the predetermined overhead allocation rate. Round to two decimal places.
Koehler makes handheld calculators in two models: basic and professional. Koehler estimated $721,000 of manufacturing overhead and 515,000 machine hours for the year. The basic model actually consumed 230,000 machine hours, and the professional model consumed 285,000 machine hours.
Compute the predetermined overhead allocation rate using machine hours (MHr) as the allocation base. How much overhead is allocated to the basic model? To the professional model?
Question: Blanchette Plant Service completed a special landscaping job for Kerry Company. Blanchette uses ABC and has the following predetermined overhead allocation rates:
Allocation Base Overhead Allocation Rate
Designing Number of designs $ 290 per design
Planting Number of plants $ 20 per plant
The Kerry job included $750 in plants; $1,300 in direct labor; one design; and 30 plants.
1. What is the total cost of the Kerry job?
Question: Low Range produces fleece jackets. The company uses JIT costing for its JIT production system.
Low Range has two inventory accounts: Raw and In-Process Inventory and
Finished Goods Inventory. On March 1, 2018, the account balances were Raw and In-Process Inventory, $9,000; Finished Goods Inventory, $1,700.
The standard cost of a jacket is $40, composed of $12 direct materials plus $28 conversion costs. Data for March’s activities follow:
Number of jackets completed 15,000
Number of jackets sold (on account, for $50 each) 14,600
Direct materials purchased (on account) $ 177,500
Conversion costs incurred $ 521,000
1. What are the major features of a JIT production system such as that of Low Range?
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