ABC Corporation has the following budgeted product cost
information for the year 3XX5.
Practical capacity: 12,800 machine hours
Budgeted consumption: 10,000 machine hours
Direct materials: $400,000
Direct labor (8,000 hours @ 11.00/hour): 88,000
Indirect labor: 10,000
Plant facility rent: 50,000
Depreciation on plant machinery and equipment: 20,000
The Predetermined Overhead Rate (PDOR): The amount of overhead transferred to the cost object when one unit of the allocation base is consumed is called the pre-determined overhead rate (PDOR). The traditional formula for the PDOR is
Budgeted factory overhead / Budgeted consumption of the allocation base
The budgeted consumption of the allocation base is the expected realized capacity of the allocation base. The PDOR represents the theoretical value of the indirect resources consumed when one unit of the allocation base is consumed.
A. (4) Calculate the planned utilization for the year 3XX5
B. (8) Calculate the amount of direct labor cost that should be budgeted for planned utilization of 88%
C. (6) Calculate the PDOR using budgeted direct labor hours as the allocation base D.
(6) Calculate the PDOR using budgeted machine hours as the allocation base
E. (16) Calculate the budgeted reported unit cost, assuming direct labor hours is the allocation base, for a cost object that requires 0.4 direct labor hours to complete and $2.00 dollars per unit of direct materials
Practical capacity: 12,800 machine hours
Budgeted consumption: 10,000 machine hours
Direct materials: $400,000
Direct labor (8,000 hours @ 11.00/hour): 88,000
Indirect labor: 10,000
Plant facility rent: 50,000
Depreciation on plant machinery and equipment: 20,000
The Predetermined Overhead Rate (PDOR): The amount of overhead transferred to the cost object when one unit of the allocation base is consumed is called the pre-determined overhead rate (PDOR). The traditional formula for the PDOR is
Budgeted factory overhead / Budgeted consumption of the allocation base
The budgeted consumption of the allocation base is the expected realized capacity of the allocation base. The PDOR represents the theoretical value of the indirect resources consumed when one unit of the allocation base is consumed.
A. (4) Calculate the planned utilization for the year 3XX5
B. (8) Calculate the amount of direct labor cost that should be budgeted for planned utilization of 88%
C. (6) Calculate the PDOR using budgeted direct labor hours as the allocation base D.
(6) Calculate the PDOR using budgeted machine hours as the allocation base
E. (16) Calculate the budgeted reported unit cost, assuming direct labor hours is the allocation base, for a cost object that requires 0.4 direct labor hours to complete and $2.00 dollars per unit of direct materials