Question

Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting
process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be
allocated to each product line. The information shown below relates to overhead.
Mobile Safes Walk-in Safes
200
50
300
200
Units planned for production
Material moves per product line
Purchase orders per product line
Direct labor hours per product line
450
350
800
1,700
(a)
* Your answer is incorrect.
The total estimated manufacturing overhead was $280,000. Under traditional costing (which assigns overhead on the basis of
direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, eg. 12.25.)
(1)
One mobile safe
$
350
per unit
(2)
One walk-in safe
$
1647
per unit

Answer 1

Under the traditional costing method (which assigns overhead on the basis of direct labor hours), the amount of manufacturing overhead costs assigned to the following by Perdon Corporation are:

1) One mobile safe    $448  per unit

2) One walk-in safe   $3,808 per unit

What is a predetermined overhead rate?

A predetermined overhead rate is used by the traditional costing method, unlike the Activity-based costing system (ABC), which uses activity drivers and cost pools.

The traditional costing method assigns overhead costs based on a companywide cost driver, for example, direct labor hours.

Data and Calculations:

Total overhead = $280,000

                                                          Mobile Safes     Walk-in Safes   Total

Units planned for production                   200                     50             250

Material moves per product line              300                    200           500

Purchase orders per product line            450                    350           800

Direct labor hours per product line         800                 1,700         2,500

Predetermined overhead rate per direct labor hour = $112 ($280,000/2,500).

Total overhead costs assigned to        $89,600         $190,400

                                                          ($112 x 800)    ($112 x 1,700)

Overhead per unit                                     $448     $3,808

                                                    ($89,600/200)    ($190,400/50)

Thus, under the traditional costing method, the amount of manufacturing overhead costs assigned are $448  per unit of Mobile Safe and $3,808 per unit of Mobile Safe.

Learn more about the traditional costing method at brainly.com/question/15366005