instructions Total Overhead Consumption Ratios Tristar Manu

instructions Total Overhead & Consumption Ratios Tristar Manufacturing produces two types of battery-operated toy soldiers: infantry and special forces. The soldiers are produced by using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows: Product Machine Hours Setups Receiving Orders Packing Orders 19,000 19,000 $68,400 $26,664 810 1,680 840 $30,744 330 Special Forces 110 90 $16,020 Required: 2:42 PM

Solution

Answer 1. Amount Machining                     68,400.00 Setups                     26,664.00 Receiving Orders                     16,020.00 Packing Orders                     30,744.00 Total Overheads                   141,828.00 Total Machine hours = 19,000 + 190,000 = 38,000 Mach hrs. Plantwide Overhead Rate = $141,828 (Total Overhead) / 38,000 Mach. Hrs (Allocation Base) Plantwide Overhead Rate = $3.73 per mach. Hrs. Overhead Assigned to Infantry Product = 19,000 Mach Hrs X $3.73 = $70,914 Overhead Assigned to Special Forces Product = 19,000 Mach Hrs X $3.73 = $70,914 Answer 2. Overhead Activity Consumption Ratio Infantry Special Forces Machining                                0.50                                   0.50 (19,000 / 38,000) (19,000 / 38,000) Setups                                0.75                                   0.25 (330 / 440) (110 / 440) Receiving                                0.90                                   0.10 (810 / 900) (90 / 900) Packing                                0.67                                   0.33 (1,680 / 2,520) (840 / 2,520) Answer 3. Activity Overhead Cost Driver Quantity Allocation Rate Indirect Costs Machining                           68,400                              38,000 Mach hrs                               1.80 Per Mach hr Setups                           26,664                                    440 setups                             60.60 per setup Receiving                           16,020                                    900 Receiving orders                             17.80 per Receiving order Packing                           30,744                                 2,520 Packing Orders                             12.20 per Packing Order Total                         141,828 Answer 4. Assigning Overhead Cost to Product Model Using ABC Method Activity Based Overhead Rate Infantry Special Forces Cost Driver Incurred OH Allocated Cost Driver Incurred OH Allocated Machining                                1.80 Per Mach hr                       19,000 Mach hrs                               34,200             19,000 Mach hrs                   34,200 Setups                              60.60 per setup                             330 setups                               19,998                   110 setups                      6,666 Receiving                              17.80 per Receiving order                             810 Receiving orders                               14,418                      90 Receiving orders                      1,602 Packing                              12.20 per Packing Order                         1,680 Packing Orders                               20,496                   840 Packing Orders                   10,248 Total Indirect Cost                               89,112                   52,716