1 . Define and explain this is of a established manufacturing cost to do business rate that is applied within a job-order charging system.
The predetermined cost to do business rate is utilized for estimating the developing overhead cost because firms cannot give the actual overhead cost to specific job. From the circumstance, Wall DГ©cor uses a classic job-order being system. You see, the costs of direct supplies and immediate labor will be charged to its specific jobs which can be unframed designs, steel-framed with no matting images, and wood-framed with matting prints.
As stated, predetermined cost to do business rate will be based upon estimates rather than actual effects. This is because the predetermined over head rate is definitely computed prior to the period begins and is used to apply over head cost throughout the period. Wall membrane DГ©cor computes this level as total estimated manufacturing overhead price divided by simply total believed cost of styles. Then, companies use established overhead rates to designate manufacturing overhead costs to each unframed or framed print, based upon the costs with the prints. To conclude, Wall DГ©cor can designate this charge to a particular job to determine total cost of each particular job when it is completed.
2 . What are the huge benefits and disadvantages of using the expense of each print out as a developing overhead expense driver?
From the case, Wall DГ©cor calculates predeterminated cost to do business rate while total approximated manufacturing cost to do business cost divided by total estimated expense of prints. The benefit of using the cost of each produce as a developing overhead expense driver is that the base is definitely to determined because we could calculate the price tag on the styles.
There are some down sides of making use of the cost of every print being a manufacturing over head cost driver. Manufacturing overhead is a great indirect expense. This means that it can be either not possible or challenging to trace these types of costs into a particular merchandise. The actual expense incurred may not relate to the price of print for example , an unframed print can have a higher share of expense cost because of its higher amount comparing to the framed print that require much effort but nevertheless get a lower share of overhead mainly because its reduced volume.
a few. Using data next site. Compute and interpret the predetermined production overhead price for Wall membrane DГ©cor.
Wall membrane DГ©cor allocates its overhead on the basis of expense of print. The predetermined overhead rate is usually 28%, calculated as follows.
The predetermined expense rate sama dengan Total expected manufacturing overhead
Total expected cost of styles
The anticipated manufacturing expense is $375, 200
The entire expected cost of print sama dengan number of predicted units distributed Г— cost of print
The cost of prints can be equal to (80, 000Г—12) & (15, 000Г—16) + (7, 000Г—20) sama dengan $1, 340, 000
Hence, the predetermined overhead price is 375, 200/1, 340, 000 = 28% or perhaps $0. twenty eight per cost of print.
some. Compute the merchandise cost pertaining to the following three items.
(a) Lance Armstrong unframed printing (base cost of print $12)
Print Cost $12. 00
Direct Labor ($12Г—10/60 minutes) 2 . 00
Manufacturing Over head (12Г—28%) three or more. 36
Total product price = $17. 36
(b) John Elway print in steel shape, no mat (base cost of printing $16)
Printing Cost $16. 00
Body and Goblet 4. 00
Direct Labor ($12Г—10/60 minutes+$21Г—20/60 minutes) on the lookout for. 00
Developing Overhead (16Г—28%) 4. forty eight
Total item cost = $33. forty eight
(c) Lambeau Field print out in wood frame with mat (base cost of produce $20)
Printing Cost 20 dollars. 00
Body and Goblet 6. 00
Matting 4. 00
Direct Labor ($12Г—10/60 minutes+$21Г—30/60 minutes) 12. 60
Manufacturing Cost to do business (20Г—28%) your five. 60
Total product cost = $48. 10
five. (a) How much of the total of overhead cost is likely to allocated to (a) unframed styles?
Total cost to do business cost allocated to unframed prints = zero. 28 Г— 80, 1000 Г— doze = 268, 800
(b) How much with the total of overhead value is expected to invested in (b) stainlesss steel framed prints?
Total overhead price...