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P2-4B

 

1. Department D: 1,200,000 / 1,500,000 = 80 (direct labor costs)

Dept e: 1,500,000 / 125,000 = 12.00 (direct labor)

Dept k: 900,000 / 120,000 = 7.50 (machine hour)

 

2. Dept. D: 140,000 (DM) + 120,000 (DL) + 96,000 (OV) = 356,000

Dept E: 126,000 (DM) + 110,000 (DL) + 132,00 (OV) = 368,000

Dept K: 78,000 (DM) + 37,500 (DL) + 78,000 (OV) = 193,500

 

3. Dept D: 2,000 (under)

Dept E: 3,000 (over)

Dept K: 4,000 (over)

 

 

Case 1

 

1. A predetermined overhead rate is calculated based on expected production for the period.  It is applied before actual costs are known, and then is adjusted once the actual costs are known.

 

2. Using the cost of each print for allocation is easier than other types of cost allocation systems.  It is also less expensive to do.  The downside is that management does not have as much control over how overhead costs are allocated.

 

3. Unframed: 80,000 x 12 = 960,000

Steel framed: 15,000 x 16 = 240,000

wood framed: 7,000 x 20 = 140,000

total: 1,340,000

 

4. Lance: $12 (print) + $2 (picking labor) + $3.36 (overhead) = $17.36

Elway: $16 (print) + $4 (glass) + $2 (labor) + $7 (framing) + $4.48 (overhead) = $33.48

Lambeau: $20 (print) + $6 (glass) + $4 (matting) + $2 (labor) + $10.50 (framing) + $5.60 (overhead) = $48.10

 

5. Unframed prints: 268,800

steel framed: 67,200

wood frame: 39,200

percentage of allocation to unframed: 71 percent