Metal foundry in altanta comma georgia, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. at the beginning of the year, the company expected to incur the following: (click the icon to view the costs.) requirements 1. compute metal's predetermined manufacturing overhead rate. 2. how much manufacturing overhead was allocated to jobs during the year? 3. how much manufacturing overhead was incurred during the year? is manufacturing overhead underallocated or overallocated at the end of the year? by how much? 4. were the jobs overcosted or undercosted? by how much? requirement 1. compute metal's predetermined manufacturing overhead rate. determine the formula to calculate the predetermined overhead rate, then calculate the rate. estimated yearly overhead costs / estimated yearly machine hours = predetermined overhead rate $560,000 / 80,000 = $7 per machine hour requirement 2. how much manufacturing overhead was allocated to jobs during the year? determine the formula to calculate the overhead to be allocated, then calculate the manufacturing overhead allocated. manufacturing predetermined overhead rate x actual direct labor costs = overhead allocated 7 x 121 = 847

Your take on decision making process

True tomato inc. makes organic ketchup. to promote its products, this firm decided to make bottles in the shape of tomatoes. to accomplish this, true tomato worked with its bottle manufacture to create a set of unique molds for its bottles. which of the following specialized assets does this example demonstrate? (a) site specificity (b) research specificity (c) physical-asset specificity (d) human-asset specificity

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?