You work for a full-service salon and day spa and are writing a sales message targeted for working women. You describe your spa'
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Answer:
a) Standard WIP 75,000 debit
factory overhead 75,000 credit
b) applied to deluxe model 28 setups x $ 400 = $ 11,200
c) total overhead to deluxe: 35,200
Explanation:
expected overhead: 120,000
total labor hours: 375 + 22 = 600
overhead rate: 120,000 / 600 = 200
applied to Standard model: 375 hours x $ 200 = 75,000
overhead cost for setups: $ 20,000
total setups (cost driver) 22 + 28
activity rate: $ 20,000 / 50 setups = $ 400
applied to deluxe model 28 setups x $ 400 = $ 11,200
overhead cost for component: $40,000
total components: 8 + 12 = 20
activity rate: 40,000 / 20= 2,000
applied to deluxe model: 12 x 2,000 = 24,000
<u>Overhead cost into deluxe model under ABC:</u>
setup overhead applied to deluxe model 28 setups x $ 400 = $ 11,200
component overhead applied to deluxe model: 12 x 2,000 = 24,000
Total: 35,200