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Acc Problem Essay

1275 words - 6 pages

1. Application rate
Given the following information, what is the predetermined overhead rate using direct labor hours as an application base?

Sales price per unit…………………$200
Direct materials per unit……………$100
Direct labor per hour………………..$30
Direct labor hour needed per unit….2 hours
Number of units to be produced…..40,000
Total estimated OH………………$200,000

2. Gross Profit
Given the following information, what is the gross profit if overhead is applied using expected direct labor hours as a base?

Sales price per unit…………………$200
Direct materials per unit……………$100
Direct labor per hour………………..$30
Direct labor hour needed per unit….2 hours
Number of units to be ...view middle of the document...

47
1 inspection costs = $25,000/1,000= $25

the overhead cost per unit is:
2*$1.25 + 4*$0.47 + .025*25 = $2.5+$1.88+$.625 = $5.00 (rounded)

total revenue per unit = $200

Cost of goods sold per unit
Direct Materials per unit = $100
Direct Labor per unit = $30*2= $60
OH per Unit = $5
total = $165

gross profit = $200-$165 = $35

4. Two product firm
A firm produces two products – A and B
The total mfg overhead is estimated to be $220,000

Data available is as follows:
Product A
Selling price $300
Direct materials per unit $75
Direct labor per unit $50
Number to be sold 1,000 units

Product B
Selling price $175
Direct materials per unit $25
Direct labor per unit $40
Number to be sold 5,000

Using a traditional method to allocate overhead based upon direct labor costs, what will the gross profit be per unit?

5. MoreTwo product firm
A firm produces two products – A and B
The total mfg overhead is estimated to be $220,000

Data available is as follows:
Product A
Selling price $300
Direct materials per unit $75
Direct labor per unit $50
Number to be sold 1,000 units
Five cuts are needed per unit
Nine parts are needed per unit

Product B
Selling price $75
Direct materials per unit $25
Direct labor per unit $40
Number to be sold 5,000
One cut is needed per unit
Three parts are needed per unit

Activity information:
Cutting: $100,000 will be spent making 10,000 cuts
Assembly $120,000 will be spent assembling 24,000 parts
Using an ABC method to allocate overhead based upon number of cuts for the cutting cost pool and the number of parts for the assembly cost pool, what will the gross profit be per unit?

Answers:
1. Answer application rate
The application rate = Total estimated OH / total direct labor hours needed
= $200,000 / (2 hours per unit x 40,000 units)
=$2.50 per DLH

2. Answer Gross Profit

Sales price per unit………………….$200
Direct materials per unit……………..(100)
Direct labor per unit (2x$30)…………(60)
Applied OH per unit (2 x $2.50)…...... ( 5) *

Gross Profit per unit………………. $35

Total GP = $35 per unit x 40,000 units = $1,400,000

* The application rate = Total estimated OH / total direct labor hours needed
= $200,000 / (2 hours per unit x 40,000 units)
=$2.50 per DLH

3. Answer additional information
The activity information could be used by finding how much of each activity was used in producing one unit. Then after we find out how much of each activity cost we can find out how much the...

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