Req1ANS
Single Plantwide Rate 1.a Calculate the predetermined overhead allocation rate.
Nerdzy Computer Company wants to analyze the costs in its generic personal computer mass production process. Within its generic segment, Nerdzy manufactures four different computers: Standard Desktop, Standard Laptop, Premium Desktop, Premium Laptop. Predetermined OH allocation Rate 14.0000%
Tene Greenhood: Tene Greenhood:
Total Est MOH / the sum of each product types # of units * DL Cost per unit of DL costs
Nerdzy has asked you as an intern to evaluate the different methods for allocating the overhead to the products. Then, you will need to provide management with your recommendation of which method to use in the future. As mentioned in the previous problem, Nerdzy allocates costs based on the % of direct labor costs. 1.b Calculate how much Manufacturing overhead should be allocated to each segment and more specifically to each unit within the different segments.
Standard Desktop Premium Desktop Standard Laptop Premium Laptop Standard Desktop Premium Desktop Standard Laptop Premium Laptop
# of units 4,000 2,100 6,200 3,548 MOH Cost Per Segment
Tene Greenhood: Tene Greenhood:
Calculation should be (# of units x DL Cost)x POAR (which you calculated above). 57,120 42,630 110,236 65,070
DM cost per unit $ 163 $ 212 $ 160 $ 265 MOH Cost Per Unit
Tene Greenhood: Tene Greenhood:
Calculation is the MOH cost per segment (calculated above) / # of units 14.28 20.30 17.78 18.34
DL cost per unit $ 102 $ 145 $ 127 $ 131
Total est. MOH $ 275,243
1.c Calculate the total manufacturing cost per unit.
Requirements Standard Desktop Premium Desktop Standard Laptop Premium Laptop
1.a Calculate the predetermined overhead allocation rate. Total Cost Per Unit
Tene Greenhood: Tene Greenhood:
MOH cost per unit (calc above) + DM cost per unit + DL Cost per unit
Tene Greenhood: Tene Greenhood:
Total Est MOH / the sum of each product types # of units * DL Cost per unit 279.28 377.30 304.78 414.34
1.b Calculate how much Manufacturing overhead should be allocated to each segment and more specifically to each unit within the different segments.
1.c Calculate the total manufacturing cost per unit.
**Hints: you will need to calculate total DL costs to determine the predetermined OH allocation rate.
Req2ANS
Multiple Department Rates
Nerdzy would also like you to allocate the costs using the multiple departments method. 2.a Calculate the predetermined overhead allocation rate for each department.
You have been provided the additional information specific to each department. OH All Rate
Internal Assembly
Tene Greenhood: Tene Greenhood:
Total est MOH costs for internal assembly / the sum of all of the machine hours for internal assembly 2.26 per Machine H
Est. MOH Allocation Base External Assembly 5.61
Tene Greenhood: Tene Greenhood:
total est MOH costs for external assembly / the sum of all of the DL hours for external assembly per DL Hou
Internal Assembly 103,847 Machine Hours Testing 1.24%
Tene Greenhood: Tene Greenhood:
Total est MOH costs for testing / the sum of all of the DL costs per unit * the number of units of DL Costs
External Assembly 68,734 Labor Hours Packaging
Tene Greenhood: Tene Greenhood:
total est MOH costs for packaging / the sum of all of the machine hours for packaging 9.30 per Machine H
Testing 14,585 Labor Costs
Packaging 88,077 Machine Hours
Cost Driver Data per department & product 2.b Allocate overhead costs to each product within each department.
Standard Desktop Premium Desktop Standard Laptop Premium Laptop Standard Desktop Premium Desktop Standard Laptop Premium Laptop
Internal Assembly 9,046 2,155 19,248 15,433 Machine Hours Internal Assembly
Tene Greenhood: Tene Greenhood:
OHAR from 2.a x internal assembly machine hours 20,443.96 4,870.30 43,500.48 34,878.58
External Assembly 3,486 1,845 4,812 2,111 Labor Hours External Assembly
Tene Greenhood: Tene Greenhood:
OHAR from 2.a x external assembly DL hours 19,556.46 10,350.45 26,995.32 11,842.71
Testing $ 61 $ 87 $ 76 $ 79 DL Costs per unit Testing
Tene Greenhood: Tene Greenhood:
OHAR from 2.a x testing DL cost per unit x # of units produced 3,035.52 2,265.48 5,858.26 3,458.02
Packaging 1,867 912 3,580 3,115 Machine Hours Packaging
Tene Greenhood: Tene Greenhood:
OHAR from 2.a x packaging # of batches 17,363.10 8,481.60 33,294.00 28,969.50
# of Units Produced 4000 2100 6200 3548
2.c Calculate the manufacturing overhead cost per unit per department.
Requirements Standard Desktop Premium Desktop Standard Laptop Premium Laptop
2.a Calculate the predetermined overhead allocation rate for each department. MOH Cost Per Unit
Tene Greenhood: Tene Greenhood:
Sum of the MOH costs for the product / the # of units of that product 15.10 12.37 17.69 22.31
2.b Allocate overhead costs to each product within each department.
2.c Calculate the manufacturing overhead cost per unit per department.
2.d Determine the total cost per unit per product. 2.d Determine the total cost per unit per product.
2.e Compare the total estimated costs per unit under each calculation method and determine which method you would recommend to management and why. Standard Desktop Premium Desktop Standard Laptop Premium Laptop
Total Cost Per Unit
Tene Greenhood: Tene Greenhood:
MOH cost per unit (above) + DL cost per unit + DM cost per unit (DM & DL are provided in Req1)
Tene Greenhood: Tene Greenhood:
OHAR from 2.a x internal assembly machine hours
Tene Greenhood: Tene Greenhood:
OHAR from 2.a x external assembly DL hours
Tene Greenhood: Tene Greenhood:
OHAR from 2.a x testing DL cost per unit x # of units produced
Tene Greenhood: Tene Greenhood:
OHAR from 2.a x packaging # of batches
Tene Greenhood: Tene Greenhood:
Total est MOH costs for internal assembly / the sum of all of the machine hours for internal assembly
Tene Greenhood: Tene Greenhood:
total est MOH costs for external assembly / the sum of all of the DL hours for external assembly
Tene Greenhood: Tene Greenhood:
total est MOH costs for packaging / the sum of all of the machine hours for packaging
Tene Greenhood: Tene Greenhood:
Sum of the MOH costs for the product / the # of units of that product
Tene Greenhood: Tene Greenhood:
Total est MOH costs for testing / the sum of all of the DL costs per unit * the number of units 280.10 369.37 304.69 418.31
2.e Compare the total estimated costs per unit under each calculation method and determine which method you would recommend to management and why.
Standard Desktop Premium Desktop Standard Laptop Premium Laptop
Single Rate Cost per unit - 0 - 0 - 0 - 0
Multiple Rate Cost per unit 280.10 369.37 304.69 418.31
Difference 280.10 369.37 304.69 418.31
Method Recommended to Management: Multiple Dept Rate
Req3ANS
3.a Compute the predetermined overhead allocation rate (POAR) for each activity:
Setup
Tene Greenhood: Tene Greenhood:
Total est MOH costs for setup / total # of batches for setup 92.52 per Batch
Production
Tene Greenhood: Tene Greenhood:
Total est MOH costs for production / total # of machine hours for production 0.82 per Machine H
Testing
Tene Greenhood: Tene Greenhood:
Total est MOH costs for testing / total # of tests 534.45 per Test
Packaging
Tene Greenhood: Tene Greenhood:
Total est MOH costs for packaging / total # of batches for packaging 204.97 per Batch
Allocation Base Estimated MOH Costs
Setup # of batches XXXXXXXXXX 3.b Allocate overhead costs to the different products based on the activites required.
Production Machine Hrs XXXXXXXXXX
Testing # of Tests 55048.6 POAR x Qty of base= Allocated MOH
Packaging # of Batches XXXXXXXXXX Standard Desktop
275243 Setup 92.52 65 6,013.71
Production 0.82 8231 6,749.42
Testing 534.45 28 14,964.67
Packaging 204.97 51 10,453.38
Total Manufacuring Overhead 38,181.18
Activity Allocation Base Standard Desktop Premium Desktop Standard Laptop Premium Laptop Total ÷ # of units 4000
Setup # of batches 65 52 71 50 238 MOH cost per unit 9.55
Production Machine Hrs 8231 2844 18221 166455 195751
Testing # of Tests 28 18 19 38 103
Packaging # of Batches 51 67 25 45 188 POAR x Qty of base= Allocated MOH
Premium Desktop
Setup 92.52 52 4,810.97
Production 0.82 2844 2,332.08
Testing 534.45 18 9,620.14
**Note, the number of units per product item can be found in the previous problem information. You will need this for part b. Packaging 204.97 67 13,732.87
Total Manufacuring Overhead 30,496.06
÷ # of units 2100
MOH cost per unit 14.52
**Note, the DM & DL costs per product can also be found in the previous problem information, which you will need for part c.
POAR x Qty of base= Allocated MOH
Standard Laptop
Setup 92.52 71 6,568.82
Production 0.82 18221 14,941.22
Testing 534.45 19 10,154.60
Packaging 204.97 25 5,124.20
Total Manufacuring Overhead 36,788.85
÷ # of units 6200
MOH cost per unit 5.93
POAR x Qty of base= Allocated MOH
Premium Laptop
Setup 92.52 50 4,625.93
Production 0.82 166455 136,493.10
Testing 534.45 38 20,309.19
Packaging 204.97 45 9,223.57
Total Manufacuring Overhead 170,651.79
÷ # of units 3548
MOH cost per unit 48.10
3.c Calculate the total production cost of each product
Standard Desktop Premium Desktop Standard Laptop Premium Laptop
Total Cost Per Unit
Tene Greenhood: Tene Greenhood:
MOH cost per unit (above) + DL cost per unit + DM cost per unit (DM & DL are provided in Req1)
Tene Greenhood: Tene Greenhood:
Total est MOH costs for setup / total # of batches for setup
Tene Greenhood: Tene Greenhood:
Total est MOH costs for production / total # of machine hours for production
Tene Greenhood: Tene Greenhood:
Total est MOH costs for testing / total # of tests
Tene Greenhood: Tene Greenhood:
Total est MOH costs for packaging / total # of batches for packaging 274.55 371.52 292.93 444.10
Data
Standard Desktop Premium Desktop Standard Laptop Premium Laptop DL Hour Single Plant Rate Prevention Costs
# of units 4000 2100 6200 3548 Machine Hr Multiple Dept Rate Appraisal Costs
DM cost per unit 163 212 160 265 DL Costs Internal Failure Costs
DL cost per unit 102 145 127 131 Machine Costs External Failure Costs
Total est. MOH 275243 Batch
Test
Est. MOH Allocation Base Standard Desktop Premium Desktop Standard Laptop Premium Laptop Total
Internal Assembly 103847 Machine Hours 9046 2155 19248 15433 45882
External Assembly 68734 Labor Hours 3486 1845 4812 2111 12254
Testing 14585 Labor Costs 61.2 87 76.2 78.6 303
Packaging 88077 Machine Hours 1867 912 3580 3115 9474
275243
0
Activity Allocation Base Standard Desktop Premium Desktop Standard Laptop Premium Laptop Estimated MOH Costs Total
Setup # of batches 65 52 71 50 XXXXXXXXXX 238
Production Machine Hrs 8231 2844 18221 166455 XXXXXXXXXX 195751
Testing # of Tests 28 18 19 38 55048.6 103
Packaging # of Batches 51 67 25 45 XXXXXXXXXX 188
275243
Req4ANS
Quality Management Systems
Label each description of cost as the type of quality cost that most closely aligns to it.
1 Wa
anty costs External Failure Costs
2 Employee training Prevention Costs
3 Service costs at customer sites External Failure Costs
4 Product testing Appraisal Costs
5 Inspection of final products or services Appraisal Costs
6 Rejected products Internal Failure Costs
7 Preventive maintenance on equipment Prevention Costs
8 Sales returns due to product defects External Failure Costs
9 Reworking products that didn't meet standards Internal Failure Costs
10 Evaluation of the quality of suppliers Prevention Costs
11 Inspection at various stages of production Appraisal Costs
12 Lost profits due to unhappy customers External Failure Costs
Tene Greenhood: Tene Greenhood:
See page 1054 for defintiions on types of quality costs.
Directions
Critical Thinking 3- Cost Management Systems
**Before you begin, save this file to your computer named as Last Name, First Name CTA3
This is a continuing problem based on Nerdzy Computer Company that you were introduced to in CTA 1.
Nerdzy Computer Company wants to analyze the costs in its generic personal computer mass production process. Within its generic segment, Nerdzy manufactures four different computers: Standard Desktop, Standard Laptop, Premium Desktop, Premium Laptop.
Nerdzy has asked you as an intern to evaluate the different methods for allocating the overhead to the products. Then, you will need to provide management with your recommendation of which method to use in the future. As mentioned in the previous problem, Nerdzy allocates costs based on the % of direct labor costs.
Req 1. Single Plantwide Rate
1.a Calculate the predetermined overhead allocation rate.
1.b Calculate how much Manufacturing overhead should be allocated to each segment and more specifically to each unit within the different segments.
1.c Calculate the total manufacturing cost per unit.
Req 2. Multiple Department
Nerdzy would also like you to allocate the costs using the multiple departments method.
2.a Calculate the predetermined overhead allocation rate for each department.
2.b Allocate overhead costs to each product within that department.
2.c Calculate the manufacturing overhead cost per unit per department.
2.d Determine the total cost per unit per product.
2.e Compare the total estimated costs per unit under each calculation method and determine which method you would recommend to management and why.
Req 3. Activity Based
Nerdzy has also considered restructuring the manufacturing plant to produce batches of products to increase efficiency. They would like you to analyze what the impact would be on the cost of each product if they switch to an activity-based production and accounting method.
3.a Compute the predetermined overhead allocation rate (POAR) for each activity.
3.b Allocate overhead costs to the different products based on the activities required.
3.c Calculate the total production cost of each product.
Req 4. Quality Management Systems
Nerdzy has organized different costs associated with quality management. It has generally defined the types of costs but would like you to identify the type of quality cost that it represents.
4.a Label each description of cost as the type of quality cost that most closely aligns to it.
Special Notes:
1. Only enter answers in blue shaded cells.
2. If a cell does not have an answer, leave it blank.
3. I tried to set the pages up so that they would print nicely on whole sheets of paper. If you would like to, print the file and complete it by hand and then transfer your answers to the electronic file.
4. Save your work often.
5. When you are done with the assignment, upload the completed file into the associated BB assignment area.
Req1
Single Plantwide Rate 1.a Calculate the predetermined overhead allocation rate.
Nerdzy Computer Company wants to analyze the costs in its generic personal computer mass production process. Within its generic segment, Nerdzy manufactures four different computers: Standard Desktop, Standard Laptop, Premium Desktop, Premium Laptop. Predetermined OH allocation Rate of DL costs
Nerdzy has asked you as an intern to evaluate the different methods for allocating the overhead to the products. Then, you will need to provide management with your recommendation of which method to use in the future. As mentioned in the previous problem, Nerdzy allocates costs based on the % of direct labor costs. 1.b Calculate how much Manufacturing overhead should be allocated to each segment and more specifically to each unit within the different segments.
Standard Desktop Premium Desktop Standard Laptop Premium Laptop Standard Desktop Premium Desktop Standard Laptop Premium Laptop
# of units 4,000 2,100 6,200 3,548 MOH Cost Per Segment
DM cost per unit $ 163 $ 212 $ 160 $ 265 MOH Cost Per Unit
DL cost per unit $ 102 $ 145 $