9 Brisbane Inc a leading manufacturer of car spare parts div

9. Brisbane, Inc., a leading manufacturer of car spare parts, divided its manufacturing process into two Departments - Production and Packing. The estimated overhead costs for the Production and Packing departments amounted to S14,000,000 and S20,000,000, respectively. The company produces two types of parts Part 1 and Part 2. The total estimated labor hours for the year were 40,000, and estimated machine hours were 35,000. The Production department is mechanized, whereas the Packing department is labor oriented. Calculate the amount of manufacturing overhead costs allocated to Part 1 Production Packing achine hours 10,000 abor hours art 1 art 2 10,000 5,000 10. The clerical activity associated with processing purchase orders to produce an order for a standard product is an example of a: A. Unit-level activity B. Batch-level activity C. Product-level activity D. Organization-sustaining activity Worker recreational facilities is an example of a cost that would ordinarily be considered to be: A. Unit-level. B. Batch-level. C. Product-level D. Organization-sustaining 11.

Solution

9 Production Packing Machine Hours Labor Hours Part 1 10,000 30,000 Part 2 25,000 10,000 Total 35,000 40,000 Cost $        14,000,000 $        20,000,000 ÷ Total Hours 35,000 40,000 Cost per hour 400 500 Part 1 Production 10000 x 400 $          4,000,000 Packing 30000 x 500 $        15,000,000 Total Manufacturing Overhead $        19,000,000 10 B Batch - level activity Explanation: Purchase order processing may contain several products , so its an batch level activity. 11 D Organization-sustaining Explanation: Workers recreational facilities is used by all employees and it s nnot related to any Unit, batch or product level.