Larner Corporation is a diversified manufacturer of industrial goods. The company%u2019s activity-based costing system contains
the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $ 7.00 per direct labor-hour Machine processing $3.00 per machine-hour Machine setups $40.00 per setup Production orders $160.00 per order Shipments $ 120.00 per shipment Product sustaining $ 800.00 per productActivity data have been supplied for the following two products: Total Expected Activity J78 W52 Direct labor-hours 1,000 40 Machine-hours 3,200 30 Machine setups 5 1 Production orders 5 1 Shipments 10 1 Product sustaining 1 1 Required:Determine the total overhead cost that would be assigned to each of the products. (Omit the "$" sign in your response.) Activity Cost Pool J78 W52 Supporting direct labor $ $ Machine processing Machine setups Production orders Shipments Product sustaining Total overhead cost $ $
1 answer:
Answer and Explanation:
The computation of total overhead cost that would be assigned to each of the products is presented with the help of a spreadsheet:-
Here are the formulas from which we can determine the total cost of J78 and W52
For J78
Total cost = Activity rate of J78 × Expected activity of J78
For W52
Total cost = Activity rate of J78 × Expected activity of W52
The Spreadsheet has been attached.
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Complete Question:
Determine the utilization and the efficiency for each of these situations:
a. A loan processing operation that processes an average of 7 loans per day. The operation has a design capacity of 10 loans per
day and an effective capacity of 8 loans per day.
b. A furnace repair team that services an average of four furnaces a day if the design capacity is six furnaces a day and the
effective capacity is five furnaces a day.
c. Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than
those other systems? Explain.
Explanation:
It's not (true) actually. Whether the design capacity is comparatively (high), the utilisation could be (low) even though the efficiency was (high).
Utilisation = Output / Design capacity = x 100%
Efficiency = Output / Effective capacity =
Utilisation =
Efficiency =
U = 1000/2000
e = 1000/1000