Posted: August 14th, 2016
1. Complete the preceding table by filling the missing amounts for 25,000 and 30,000 units.
2. Assume that Farmington actually makes 28,000 units. What would be the total costs and the cost per unit at this level of activity?
See attached for table
1) Use direct labor hours as the cost driver to compute the allocation rate. Determine the amount of budgeted overhead cost for each department.
2) Use machine hours as the cost driver to compute the allocation. Determine the amount of budgeted overhead cost for each department.
Perez Company makes wooden tables, chairs, and lamp bases. Its expected overhead costs for the
next fiscal year are:
Factory manager’s salary: $180,000
Factory utilities: $100,000
Depreciation on equipment: $70,000
Miscellaneous factory costs: $50,000
Perez uses direct labor hours as the cost driver to allocate overhead costs. Budgeted direct labor hours for the three products are: tables, 8,000; chairs, 10,000; lamp bases, 2,000.
a) Allocate the budgeted overhead costs to the three products.
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