Tangipahoa Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products.Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labor dollars in the Assembly Department.At the beginning of 2007,the following estimates were provided for the coming year:

The accounting records of the company show the following data for Product #A273:

Required:
a.Compute the predetermined manufacturing overhead cost driver rate for each department.
b.Compute the total cost of Product #A273.
c.Provide possible reasons why Tangipahoa Manufacturing uses two different cost drivers.

Question

Tangipahoa Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products.Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labor dollars in the Assembly Department.At the beginning of 2007,the following estimates were provided for the coming year:

The accounting records of the company show the following data for Product #A273:

Required:
a.Compute the predetermined manufacturing overhead cost driver rate for each department.
b.Compute the total cost of Product #A273.
c.Provide possible reasons why Tangipahoa Manufacturing uses two different cost drivers.

Quizplus · Accepted Answer

The Answer of Tangipahoa Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products.Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labor dollars in the Assembly Department.At the beginning of 2007,the following estimates were provided for the coming year:

The accounting records of the company show the following data for Product #A273:

Required:
a.Compute the predetermined manufacturing overhead cost driver rate for each department.
b.Compute the total cost of Product #A273.
c.Provide possible reasons why Tangipahoa Manufacturing uses two different cost drivers.

Tangipahoa Manufacturing Uses Departmental Cost Driver Rates to Apply Manufacturing