Question

DATA FOR GRAPHS:

1) Est. Overhead costs by Department

a) Finishing: $3,000,000

b) assembly: $5,000,000

2)Estimated Direct Labor Hours & Machine Hours by Department

a) Direct labor hours: Finishing=25,000 hr , Assembly=100,000 hr

b) Machine hours: finishing =30,000 hr , assembly = 70,000 hr

3) Est. Overhead costs by activity

a) supervision : $2,000,000

b) maintenace : $6,000,000

Cost Driver & Exp. Usage by Activity

a) Supervison: 125,000 direct labor hours

b) Maintance: 100,000 machine hours

Chrom Co. manufactures two models, the XL and RD. It also has two departments, assembly and finishing. The company wants to assign overhead costs its two different models to better understand the profitability of each model. The Tableau Dashboard provides data for our analysis. Estimated Overhead Costs by Estimated Direct Labor Hours & Department Machine Hours by Department 150,000 hrs 125,000 hrs 100,000 hrs - Finishing 75,000 hrs Assembly Total: $8,000,000 Assembly 50,000 hrs Assembly 25,000 hrs Finishing Finishing Direct Labor Hours Machine Hours

Answer 1

ANSWER

Chart Name:	Estimated direct labor hours & machine hours by department
From above the chart following details are identified.
Direct labor hours for finishing		25,000
Machine hours for finishing		30,000
	Direct labor hours	Machine hours
Total	125,000	100,000
Finishing (less)	25,000	30,000
Assembly	100,000	70,000
Chart Name:	Estimated overhead cost by activity
From above the chart following details are identified.
Supervision (8000000*1/4)		$     2,000,000
Maintenance (8000000*3/4)		$     6,000,000
Total overhead		$     8,000,000

Part: 2A

Activity	Overhead	Divided by: Activity driver		Activity Rate
Maintenance	$         6,000,000	100,000	MH	$          60	per MH
Supervision	$         2,000,000	125,000	DLH	$          16	per DLH
			XL model			RD model
Activity	Activity Rate		Activity driver incurred		Overhead assigned	Activity driver incurred		Overhead assigned
Maintenance	$                       60	per MH	1	MH	$          60	3	MH	$        180
Supervision	$                       16	per DLH	2	DLH	$          32	3	DLH	$          48
Overhead Cost per unit					$          92			$        228

Part: 2B

Total overhead	$         8,000,000
Divided by: Total Direct labor hours	125,000
Plant-wide OH rate	$                       64
Model	Activity Driver		Plant-wide OH rate	OH Cost per unit
XL	$                       64	DLH	2	$        128
RD	$                       64	DLH	3	$        192

Part: 3

Model	OH cost per unit using ABC	OH cost per unit using Plant wide OH rate	Which method has lower cost ?
XL	$                       92	$                 128	ABC
RD	$                     228	$                 192	Single plant wide OH rate
The XL production manager would prefer ABC overhead cost allocation method.			ABC
The RD production manager would prefer Plant wide OH rate overhead cost allocation method.			Single plant wide OH rate

THANK YOU FOR THE QUESTION....KINDLY RATE....IT HELPS ME A LOT