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4 years ago

PB5.

Business

1 answer:

Olin [163]4 years ago

6 0

Answer:

Calculation of cost driver rates

Material receipts = $249,975/750 = $333.30 per requisition

Machine set-up = $150,000/200 set-ups = $750.00 per set-up

Assembly = $450,000/300 parts = $1,500 per part

Machine maintenance = $175,000/3,500 hours = $50 per machine hour

Calculation of overhead allocated to each unit of products

Material receipts

Simple = $333.30 x 300

369,991 units

= $0.27 per unit

Removable = $333.33 x 450

146,100 units

= $1.03 per unit

Machine set-up

Simple = $750 x 150 set-ups

369,991 units

= $0.30 per unit

Removable = $750 x 50 set-ups

146,100 units

= $0.26

Assembly

Simple = $1,500 x 100 parts

369,991 units

= $0.41 per unit

Removable = $1,500 x 200 parts

146,100 units

= $2.05 per unit

Machine maintenance

Simple = $50 x 2,000 machine hours

369,991 units

= $0.27 per unit

Removable = $50 x 1,500 machine hours

146,100 units

= $0.51 per unit

Calculation of overhead allocated to each product

Simple Removable

$ $

Material receipts 0.27 1.03

Machine set-up 0.30 0.26

Assembly 0.41 2.05

Machine maintenance 0.27 0.51

Overhead allocated 1.25 3.85

Explanation:

The overhead allocation rate is calculated by dividing the overhead for each cost pool by the total cost driver for each cost pool.

The overhead allocated to each product is calculated by multiplying the cost driver rate by the cost driver for each product divided by the number of units of each product.

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