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juin [17]
3 years ago
13

Channing Corporation makes two products (A1 and B2) that require direct materials, direct labor, and overhead. The following dat

a refer to operations expected for next month.
A1 B2 Total
Revenue $100,000 $ 300,000 $400,000
Direct material 30,000 60,000 90,000
Direct labor 40,000 95,000 135,000
Overhead:
Direct-material related 13,500
Direct-labor related 40,500
Required:
Channing uses a two-stage cost allocation system, It uses direct-material costs to allocate direct-materials related overhead and direct-labor costs to allocate direct-labor related overhead costs.
a. Compute the direct-material related overhead rate for next month.
b. Compute the direct-labor related overhead rate for next month.
c. What is the total overhead allocated to product A1 next month?
d. What is the total overhead allocated to product B2 next month?
a. predetermined rate ?? % of direct materials costs
b. predetermined rate ?? % of direct-labor cost
c. Total Overhead (A1) ??
d. Total Overhead (B2) ??
Business
1 answer:
Rudiy273 years ago
5 0

Answer:

a. 15% of direct material cost

b.  30% of direct labor cost

c. $16,500

d. $37,500

Explanation:

The computation is shown below:-

a. Predetermine overhead rate = Direct-material related ÷ Total of direct labor

= 13,500 ÷ 90,000

= 15% of direct material cost

b. Predetermine overhead rate = Direct-labor related ÷ Total of direct labor

= 40,500 ÷ 135,000

= 30% of direct labor cost

c. Total overhead (A1) = Direct material × Predetermine overhead rate of direct material + Direct labor × Predetermine overhead rate of direct labor

= 30,000 × 15% + 40,000 × 30%

= $16,500

d. Total overhead (B2) = Direct material × Predetermine overhead rate of direct material + Direct labor × Predetermine overhead rate of direct labor

= 60,000 × 15% + 95,000 × 30%

= $37,500

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Answer:

a. The cost of inventorying a single item is $1.00 per item.

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Explanation:

Note: This question is not complete. A complete question is therefore provided before answering the question as follows:

Imagine you have some workers and some handheld computers that you can use to take inventory at a warehouse. There are diminishing returns to taking inventory. If one worker uses one computer, he can inventory 125 items per hour. Two workers sharing a computer can together inventory 175 items per hour. Three workers sharing a computer can together inventory 185 items per hour. And four or more workers sharing a computer can together inventory fewer than 185 items per hour. Computers cost $100 each and you must pay each worker $25 per hour.

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The explanation to the answer is now provided as follows:

Note: See the attached excel file for all the calculations.

a. If you assign one worker per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $ _____ per item

The cost of inventorying a single item is <u>$1.00 per item.</u>

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c. If you assign three workers per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $_____ per item

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d. If you assign four workers per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $_____ per item.

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e. How many workers per computer should you assign if you wish to minimize the cost of inventory per single item? _____ worker(s) per computer

To minimize the cost of inventory per single item, you should assign the number of workers at a point where the cost inventorying a single item is the lowest.

From from parts a to d above, the <u>lowest cost of $0.86 per item </u>of inventorying a single item is obtained in part b when you assign two workers per computer.

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Download xlsx
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