16.(25 points total) The Klamath Corp. produces two products, saws and drills. Three activities are used in their manufa...

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16.(25 points total) The Klamath Corp. produces two products, saws and drills. Three activities are used in their manufacture. These activities and their associated costs and bases are as follows:

Activity

Budgeted Costs

Activity Base

Machining

$100,000

Machine hours

Assembly

$400,000

Labor hours

Setup

$60,000

number of setups

Total OH costs

$560,000

Activity base

Saws

Drills

Total

machine hours

6,000

4,000

10,000

labor hours

7,000

13,000

20,000

number of setups

11

4

15

Units produced

500

600

Requirements:

(8 points) Determine the activity rate for each activity.

Activity

Budgeted Costs

Activity Base

Activity Rate

Machining

$100,000

Assembly

$400,000

Setup

$60,000

Total OH costs

$560,000

b) (6 points) Determine the overhead cost per unit for each product using the activity rates calculated above.

Saws

Drills

OH cost per unit:

Supporting calculations:

c) (3 points) Determine the single plantwide overhead rate if the company uses machine hours as the base for allocating overhead to jobs. Show your calculations.

d) (4 points) Determine the overhead cost per unit for each product using the single overhead rate calculated above.

Saws

Drills

OH cost per unit:

Supporting calculations:

e) (4 points) Why are the costs per unit different using the single plantwide rate and the activity based costing methods? Explain in detail and refer to the activity volumes in the introduction to this problem.

17. (8 points total) Accuracy Testing Company manufactures custom testing equipment. They produce their products in small quantities to customer specifications. They have adopted a job cost accounting system. Answer each of the questions below.

Required. During the month of January, the materials requisitions and direct labor time tickets showed the following information:

Date

Job Number

Materials Used

1/1

101

$13,200

1/6

102

37,250

1/15

102

8,700

1/22

103

23,750

Date

Job Number

DL Hours

1/2

101

65

1/9

101

17

1/16

102

36

1/16

103

18

1/30

103

29

Compute the costs incurred for the month on each job. Use the DL average rate of $21 per hour and the overhead allocation rate of $14 per DL hour. Show your work. Remember that the cost of any job is DM + DL + OH.

(4 points) Job 101, total costs = ___________________

(4 points) If the company prices their products at 140% of cost, what will job 101 be sold for?










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