Redfern Audio produces audio equipment including headphones. At the Campus Facility, it produces two wireless models, Standard and Enhanced, which differ both in the materials and components used and in the labor skill required. Data for the Campus Plant for the third quarter follow. Standard Enhanced Total Units produced 25,200 8,400 33,600 Machine-hours 15,120 10,080 25,200 Direct labor-hours 18,900 18,900 37,800 Direct materials costs $ 504,000 $ 756,000 $ 1,260,000 Direct labor costs 302,400 642,600 945,000 Manufacturing overhead 846,720 Total costs $ 3,051,720 Required: Compute the predetermined overhead rate assuming that Redfern Audio uses direct labor-hours to allocate overhead costs. Note: Round your answer to 2 decimal places. Predetermined overhead rate per direct labor hour

Redfern Audio produces audio equipment including headphones. At the Campus Facility, it produces two wireless models, Standard and Enhanced, which differ both in the materials and components used and in the labor skill required. Data for the Campus Plant for the third quarter follow. Standard Enhanced Total Units produced 25,200 8,400 33,600 Machine-hours 15,120 10,080 25,200 Direct labor-hours 18,900 18,900 37,800 Direct materials costs $ 504,000 $ 756,000 $ 1,260,000 Direct labor costs 302,400 642,600 945,000 Manufacturing overhead 846,720 Total costs $ 3,051,720 Required: Compute the predetermined overhead rate assuming that Redfern Audio uses direct labor-hours to allocate overhead costs. Note: Round your answer to 2 decimal places. Predetermined overhead rate per direct labor hour

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 31P: Fisico Company produces exercise bikes. One of its plants produces two versions: a standard model...

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	Standard	Enhanced	Total
Units produced	25,200	8,400	33,600
Machine-hours	15,120	10,080	25,200
Direct labor-hours	18,900	18,900	37,800
Direct materials costs	$ 504,000	$ 756,000	$ 1,260,000
Direct labor costs	302,400	642,600	945,000
Manufacturing overhead			846,720
Total costs			$ 3,051,720

Required:

Compute the predetermined overhead rate assuming that Redfern Audio uses direct labor-hours to allocate overhead costs.

Note: Round your answer to 2 decimal places.

Predetermined overhead rate

per direct labor hour

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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Redfern Audio produces audio equipment including headphones. At the Campus Facility, it produces two wireless models, Standard and Enhanced, which differ both in the materials and components used and in the labor skill required. Data for the Campus Plant for the third quarter follow. Standard Enhanced Total Units produced 25,500 8,500 34,000 Machine-hours 15,300 10,200 25,500 Direct labor-hours 19,125 19,125 38,250 Direct materials costs $ 510,000 $ 765,000 $ 1,275,000 Direct labor costs 306,000 650,250 956,250 Manufacturing overhead 841,500 Total costs Compute the predetermined overhead rate assuming that Redfern Audio uses direct labor costs to allocate overhead costs. Note: Round your answer to 2 decimal places. Predetermined overhead rate % of direct labor cost
Redfern Audio produces audio equipment including headphones. At the Campus Facility, it produces two wireless models, Standard and Enhanced, which differ both in the materials and components used and in the labor skill required. Data for the Campus Plant for the third quarter follow. Units produced Machine-hours Direct labor-hours Direct materials costs Direct labor costs Manufacturing overhead Total costs Standard 24,000 14,400 18,000 $ 480,000 288,000 Enhanced 8,000 9,600 18,000 $ 720,000 612,000 Total 32,000 24,000 36,000 $ 1,200,000 900,000 864,000 $ 2,964,000 Required: a. Compute the individual product costs per unit assuming that Redfern Audio uses the number of units to allocate overhead to the products. b. Compute the individual product costs per unit assuming that Redfern Audio uses direct labor hours to allocate overhead to the products. c. Compute the individual product costs per unit assuming that Redfern Audio uses machine hours to allocate overhead to the products.
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