Departmental overhead rates quizlet
Activity Based Costing: Departmental vs Plantwide Overhead Rate Demonstration Problem, Managerial Accounting. What are departmental overhead rates? Departmental overhead rates are used by many manufacturers instead of using a single, plant-wide overhead rate.The reason for departmental overhead rates is that a manufacturer is likely to produce many diverse products which use different processes (each of which has different costs). A company uses the departmental overhead rate method. Total overhead costs are $6,000,000. Of this total, the machining department is assigned overhead costs of $4,000,000 and the assembly department is allocated the remainder. The machining department uses machine hours as their allocation base and has 80, 000 machine hours. Rafner Manufacturing identified the following budgeted data in its two production departments. Required. What are the company's departmental overhead rates if the assembly department assigns overhead based on direct labor hours and the finishing department assigns overhead based on machine hours?
The departmental overhead rate method is more costly to implement than the traditional overhead rate method. The departmental overhead rate method does not assign overhead on the basis of volume-related measures. Overhead costing accuracy is improved by the use of multiple departmental rates rather than a single overhead rate. The departmental
C. Overhead costing accuracy is improved by the use of multiple departmental rates rather than a single overhead rate. D. The departmental overhead rate method does not assign overhead on the basis of volume-related measures. E. The departmental overhead rate method is more costly to implement than the traditional overhead rate method. Compute Aztec's departmental overhead rate for the mixing department based on machine hours. $525,200/804,000 MH = $0.65 per MH Compute Aztec's departmental overhead rate for the baking department based on direct labor hours. $404,000/84,000 DLH = $4.81 per DLH Compute Aztec's departmental overhead rate for the baking department based on When calculating a departmental overhead rate, what should the numerator be? A. Total estimated amount of manufacturing overhead for the factory B. Total estimated amount of the departmental allocation base C. Actual quantity of the departmental allocation base used by the job D. Total estimated departmental overhead cost pool Start studying Plantwide & Departmental Overhead. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Search. overhead is determined separately for each department; overhead rate is computed for each production department passing through that department. Quizlet Live. Quizlet Learn. Diagrams. Flashcards
Activity Based Costing: Departmental vs Plantwide Overhead Rate Demonstration Problem, Managerial Accounting.
By using departmental overhead rates, we have the flexibility to use a different activity or cost driver for each department. Some departments rely heavily on manual labor but other departments rely heavily on machinery. Direct labor hours might been a good indicator of cost in some departments but machine hours might work better for others. Departmental Rate: The overhead expense rate for every department in a factory production process. The departmental rate is different for every stage of the production process when various Activity Based Costing: Departmental vs Plantwide Overhead Rate Demonstration Problem, Managerial Accounting. James Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $34 per machine hour, while the Sanding Department uses a departmental overhead rate of $23 per direct labor hour. E4-17A Fine Furnishings manufactures upscale custom furniture. Donovan's currently uses a plantwide overhead rate based on direct labor hours to allocate its $1,100,000 of manufacturing overhead to individual jobs. However, DeanaDeana AbleAble, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. . Currently, the Machining Department incurs The departmental overhead rate method is more costly to implement than the traditional overhead rate method. The departmental overhead rate method does not assign overhead on the basis of volume-related measures. Overhead costing accuracy is improved by the use of multiple departmental rates rather than a single overhead rate. The departmental Predetermined overhead rate is used to apply manufacturing overhead to products or job orders and is usually computed at the beginning of each period by dividing the estimated manufacturing overhead cost by an allocation base (also known as activity base or activity driver).Commonly used allocation bases are direct labor hours, direct labor dollars, machine hours, and direct materials.
Rafner Manufacturing identified the following budgeted data in its two production departments. Required. What are the company's departmental overhead rates if the assembly department assigns overhead based on direct labor hours and the finishing department assigns overhead based on machine hours?
The departmental overhead rate method is more costly to implement than the traditional overhead rate method. The departmental overhead rate method does not assign overhead on the basis of volume-related measures. Overhead costing accuracy is improved by the use of multiple departmental rates rather than a single overhead rate. The departmental Predetermined overhead rate is used to apply manufacturing overhead to products or job orders and is usually computed at the beginning of each period by dividing the estimated manufacturing overhead cost by an allocation base (also known as activity base or activity driver).Commonly used allocation bases are direct labor hours, direct labor dollars, machine hours, and direct materials.
Departmental overhead rates typically do a better job of matching each department's overhead costs to the products that use the department's resources than do plantwide overhead rates. Answer: False When a company has established separate manufacturing overhead rates for each department, it is using
Start studying Plantwide & Departmental Overhead. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Search. overhead is determined separately for each department; overhead rate is computed for each production department passing through that department. Quizlet Live. Quizlet Learn. Diagrams. Flashcards Question: Departmental Overhead Rates May Not Correctly Assign Overhead Costs Due To:a. The Use Of Direct Labor Hours In Allocating Overhead Costs To Products Rather Than Machine Time Or Quantity Of Materials Used.b.the High Correlation Between Direct Labor-hours And The Incurrence Of Overhead Costs.c.overreliance On Volume As A Basis For Allocating Overhead What are departmental overhead rates? Departmental overhead rates are used by many manufacturers instead of using a single, plant-wide overhead rate.The reason for departmental overhead rates is that a manufacturer is likely to produce many diverse products which use different processes (each of which has different costs). By using departmental overhead rates, we have the flexibility to use a different activity or cost driver for each department. Some departments rely heavily on manual labor but other departments rely heavily on machinery. Direct labor hours might been a good indicator of cost in some departments but machine hours might work better for others. The departmental overhead rate method is an estimate where labor and machine hour rates are calculated by department. Easier to Manage Determining overhead rates for each department level decentralizes control of production costs and delegates it to department managers.
Start studying Plantwide & Departmental Overhead. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Search. overhead is determined separately for each department; overhead rate is computed for each production department passing through that department. Quizlet Live. Quizlet Learn. Diagrams. Flashcards Question: Departmental Overhead Rates May Not Correctly Assign Overhead Costs Due To:a. The Use Of Direct Labor Hours In Allocating Overhead Costs To Products Rather Than Machine Time Or Quantity Of Materials Used.b.the High Correlation Between Direct Labor-hours And The Incurrence Of Overhead Costs.c.overreliance On Volume As A Basis For Allocating Overhead What are departmental overhead rates? Departmental overhead rates are used by many manufacturers instead of using a single, plant-wide overhead rate.The reason for departmental overhead rates is that a manufacturer is likely to produce many diverse products which use different processes (each of which has different costs). By using departmental overhead rates, we have the flexibility to use a different activity or cost driver for each department. Some departments rely heavily on manual labor but other departments rely heavily on machinery. Direct labor hours might been a good indicator of cost in some departments but machine hours might work better for others.