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19 July, 17:00

Flynn Industries has three activity cost pools and two products. It estimates production 3,000 units of Product BC113 and 1,500 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 $16,000 40 25 15

Machining Machine hours 110,000 5,000 1,000 4,000

Packing Orders 30,000 500 150 350

Required:

Prepare a schedule showing the computations Of the activity-based Overhead rates per cost driver.

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Answers (1)
  1. 19 July, 17:06
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    Instructions are below.

    Explanation:

    Giving the following information:

    Machine setup Setups $16,000 40 25 15

    Machining Machine hours $110,000 5,000 1,000 4,000

    Packing Orders $30,000 500 150 350

    To calculate the estimated manufacturing overhead rate we need to use the following formula:

    Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

    Machine setup = 16,000 / (40+25+15) = $200 per setup

    Machining = 110,000 / (5,000 + 1,000 + 4,000 = $11 per machine hour

    Packing = 30,000 / (500 + 150 + 350) = $30 per order
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