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Calculate Total Overhead To Be Assigned And Total Overhead Cost

Question

The accountant for Scenic Photographic Supply Company has established the following overhead cost pools and activity drivers.

Overhead Cost Pool

Budgeted Overhead Cost

Activity Driver

Machine set-ups

$100,000

Number of setups

Material handling

$50,000

Weight of raw material

Hazardous waste control

$25,000

Weight of hazardous chemicals used

Quality control inspection

$37,500

Number of inspections

Other overhead costs

$100,000

Machine hours

Total

$312,500

 

 

Overhead Cost Pool

Budgeted Level for Activity Driver

Overhead Rate

Machine set-ups

100

$1,000 per setup

Material handling

50,000 kilos

$1 per kilo

Hazardous waste control

10,000 kilos

$2.50 per kilo

Quality control inspection

1,000

$37.50 per inspection

Other overhead costs

20,000

$5 per machine hour

An order for 1,000 boxes of film development chemicals has the following production requirements:

Machine set-ups

4 Set-ups

Raw material

l0,000 kilos

Hazardous materials

2,000 kilos

Inspections

10 inspections

Machine hours

500 machine hours

Required

A. Calculate the total overhead that should be assigned to the development chemical order.

B. What is the overhead cost per box of chemicals?

C. Suppose Scenic Photographic Supply Company was to use a single, predetermined overhead rate based on machine hours. Calculate the rate per hour.

D. Using the single plantwide overhead rate based on machine hours, what will be the total overhead assigned and the overhead cost per box of chemicals

 

Summary

The question belongs to Finance and it discusses about calculating total overhead to be assigned, the overhead cost, overhead rate based on machine hours and rate per hour.

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