Prescott expects to produce 225,000 basic models and 225,000 professional models. Compute the predetermined overhead allocation
rates using activity-based costing. How much overhead is allocated to the basic model? To the professional model?Estimated overhead cost / Estimated qty of the allocation base= Predetermined OH Basic Model Professional ModelManufacturing overhead assembly 264800 195200Manufacturing overhead packaging 55200 227700Total manufacturing overhead cost 320000 422900
1 answer:
Answer and Explanation:
The Calculation of Predetermined OH Rate is shown below:
For Materials Handling, it is
= Estimated Overhead Costs ÷ Estimated allocated base Quantity
= $54,000 ÷ 96
= $562.50 per part
For Machine Setup, it is
= Estimated Overhead Costs ÷ Estimated allocated base Quantity
= $204,000 ÷ 60
= $3,400 per setup
For Insertion of Parts, it is
= Estimated Overhead Costs ÷ Estimated allocated base Quantity
= $486,000 ÷ 96
= $5,062.50 per part
Now
Calculation of allocated OH is
For Basic Model:
Allocated OH is
= $562.50 × 32 + $3,400 × 20 + $5,062.50 × 32
= $248,000
For Professional Model:
Allocated OH is
= $562.50 × 64 + $3,400 × 40 + $5,062.50 × 64
= $496,000
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Answer:
The total cost of goods sold = $70,000
Explanation:
Given:
Initial inventory at the start of the year for Jackson Co. = $20,000
Total cost of purchases made during the year = $80,000
Inventory remaining at the end of the year = $30,000
Solution:
Total inventory for Jackson Co. during the year =
Inventory remaining at the end of the year = $30,000
The cost of the goods sold can be calculated by subtracting the remaining inventory from the total inventory.
Thus, cost of goods sold can be given as :
⇒
⇒
The total cost of goods sold = $70,000