Question

eBook Calculator Applied Overhead and Unit Overhead Cost: Plantwide Rates Seco, Inc., produces two types of clothes dryers: deluxe and regular. Seco uses a plantwide rate based on direct labor hours to assign its overhead costs. The company has the following estimated and actual data for the coming year Estimated overhead $2,000,000 Expected activity 50,000 Actual activity (direct labor hours): Deluxe dryer 10,000 Regular dryer 40,000 Units produced Deluxe dryer 20,000 Regular dryer 200,000 Required: 1. Calculate the predetermined plantwide overhead rate, using direct labor hours. per hour Calculate the applied overhead for each product, using direct labor hours. Applied overhead Deluxe Regular 2. Calculate the overhead cost per unit for each product. Next Check My Work Save and Exit Submit Assignment for Grading

Answer 1

DATE sate solution. Step-l@calculation of, baedetermined oven head daile , using direct labour hour For Calculating, bredetermind overhead we need; Estimated oven heads 0 $ 2000,000 Expected actioity Direct labous houd) 50000 hos Applying formu bredetermineol / Estimated over head rate Estimated querheads Expected activity -$40/houa 2000 000 50 000 so Calculation of applied Guerheads for each product , wing direct labour hour. For calculating applied overhead for each product we have Estimated over head mate of $40 per hour which we have calculated above in Step-1-(a). By appling applying Estimated overhead $40 per hour to Actual labour hours used by each product, we will get applied

DATE PAGE overhead for each product. be let's do it bractically لا O Applied overhead for deluxe - Predeterminedoverhead rate X Actual Labour hours used by delux 40 X 10000 $ 400 000 & Applied overheads for Regular - Poedetermined Queshead Rate X Actual labour hauas. used by Regular - 40 x 40000 $1600000 - 15 stepta Calculate the overhead cost per unit for each product we calculate overhead cost fer Unit by deviding Applied overheads for each product, we have aiready calculated abivere in stef-4-0, toom Units of each product. No. of

DATE PAGE Let's see how to calculate this practically Overhead cost per Unit Applied overhead, fordi uke (For deluxe) No. of Units produced %= poker bi 400 000 20000 t esa CM querheads, cost fer Unit o Applied cupbeads for for Regular) Regular ogs Units ponduced $8 Perunit No. 1600000 200 000 0000V XON Steb-8 Calculation of effect on the boofitability of deluxe product line, when de laxe booduet wed 20000 houas (to bonduce 20000 units) instead of 10000 hours (for the same units) when pompasy seco Inc. ponduces 20000 units by asing looob Labour hours then muaskead tort per tot so bile pozbants Applied overheads for deluxe is = $400 000

Now, seco Ince produces 2000 nits by using 20000 Labour hours then proverhead cost for deluse fesseurist is calculated as follows: Wwe calculate Applied overhead for deluxe by using 1oooo labour hours. Applied overheads for deluxe Bredetermined overhead sate X 20000 Labour 5000 hours JOO 40 X 20000 $ 800 000

DATE PAGE (30 Cadulation of effect on the profitability of deluxe fonducto line up all 20000 units doe soldi nolla Applied overhead (using 10000 labour hou as Applied ovenikeade lusing 20000labour 400 000 800 000 -$4.00000 we can say that profit would drop by $400000