Question

Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic. Activity Expected Costs Expected Activity Handling materials $ 625,000 100,000 parts Inspecting product 900,000 1,500 batches Processing purchase orders 105,000 700 orders Paying suppliers 175,000 500 invoices Insuring the factory 300,000 40,000 square feet Designing packaging 75,000 2 models Required: 1. Compute a single plantwide overhead rate, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours. 2. In January 2017, the Deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.

Compute a single plantwide overhead rate, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours.

In January 2017, the Deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate. (Round "OH cost" answers to 2 decimal places.)

Answer 1

Answer:

A. 17.44 per hour

B. Deluxe $43,600.00

Basic $104,640.00

Explanation:

Xie Company

Activity, Expected cost

Handling materials $ 625,000

Inspecting product $900,000

Processing purchase orders $105,000

Paying supplier $175,000

Insuring the factory $300,000

Designing packaging $75,000

TOTAL $2,180,000

1) overhead rate per direct labour hour = total overhead cost / total direct labour hours

= 2,180,000 / 125,000

= 17.44 per hour

2.

Model, Direct labour hr, Overhead rate

Deluxe $2,500 ×17.44= $43,600.00 Cost allocated.

Basic $6,000×17.44=$104,640.00Cost allocated.