Question

Flynn Industries has three activity cost pools and two products. It estimates production 2,000 units of Product BC113 and 1,000 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Flynn accumulated the following data relative to those activity cost pools and cost drivers.

Annual Overhead Data Estimated Use of Cost Drivers per Product
Activity Cost Pools Cost Drivers Estimated Overhead Estimated Use of Cost Drivers per Activity Product BC113 Product AD908
Machine setup Setups $27,000 45 28 17
Machining Machine hours 109,560 4,980 1,180 3,800
Packing Orders 26,950 540 180 160

Required:
Using the above data, do the following:
Prepare a schedule Showing the Computations Of the activity-based overhead rates per Cost driver.

Answer 1

Follows are the instructions to this question:

Explanation:

Given:

Configuration of machine =
`\$16,000 \ \ \ \ 40 \ \ \ \ 25 \ \ \ \ 15`

Machine hours=
`\$110,000 \ \ \ \ 5,000 \ \ \ \ 1,000 \ \ \ \ 4,000`

Order on Packing=
`\$30,000\ \ \ \ 500 \ \ \ \ 150 \ \ \ \ 350`

We have to use the following formula in order to measure the expected production overhead rate:

Estimated overhead production rate= Total projected production expenses and for period/Total base allocation sum

Machine Configuration
`=(16,000)/((40+25+15))= (16,000)/(80) =\$200 / \ setup`

Machining hour=
`=(110,000)/((5,000 + 1,000 + 4,000)) =(110,000)/((10,000))= \$11 / \ machine \ hour`

Packing
`= (30,000)/((500 + 150 + 350))= (30,000)/(1000)= \$30/ \ order`