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QUESTION:

George Inc. manufactures two products for use in the manufacturing of mining equipment: PT gears and XR gears.

During the past month the company produced $50$ PT gears and $300$ XR gears and incurred an estimated total overhead of $$94,410.$

The company's accountant analyzed the overhead costs and determined the following with regards to the activities which caused the costs:

Activity Budgeted

Overhead Activity

Driver

Material handling Number of material moves $$33,350$

Machinery set up Number of set ups $$28,500$

Inspections Number of inspections $$32,560$

Total costs $$94,410$

The activity driver for each product and in total was as follows:

Activity

Driver PT Gears XR Gears Total

Number of material moves $5206301150$

Number of set ups $170400570$

Number of inspections $270470740$

What is the activity rate that would be used for material handling?

HINT: remember to apply the entry rules.

What is the activity rate that would be used for machinery set up$?$

HINT: remember to apply the entry rules.

What is the activity rate that would be used for Inspections?

HINT: remember to apply the entry rules.

Assign the manufacturing overhead for the past month to the two products using activity based costing. What is the overhead cost PER UNIT for PT Gears?

HINT: calculate the total overhead assigned to each product and then divide by the number of products produced to determine the overhead cost per unit!

Assign the manufacturing overhead for the past month to the two products using activity based costing. What is the overhead cost PER UNIT for XR Gears?

HINT: calculate the total overhead assigned to each product and then divide by the number of products produced to determine the overhead cost per unit!

Assume, instead, that the company used a plantwide overhead rate and the cost driver of direct labour hours.

The company has the following information:

Cost Driver PT Gears XR Gears Total

Direct labour hours $5401,2601,800$

What is the plantwide rate per direct labour hour?

Assign the manufacturing overhead for the month to each product using the plantwide overhead rate.

What is the per unit overhead cost for PT Gears if the company used the plantwide rate?

HINT: remember the entry rules!

What is the per unit overhead cost for XR Gears if the company used the plantwide rate?

HINT: remember the entry rules!

Answer & Explanation Solved by verified expert

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