Concept Overview-Ch 4 (2 points)

Concept Overview-Ch 4 (2 points)

question 1

ok, hi future drake!

you struggled with this one, for a lot of reasons, mostly because you're an idiot on a number of levels

ok, let's look at this, the first thing is asking you to calculate the predetermined overhead rate, which is simply

estimated total overhead cost / cost driver

so in this case, the estimated total overhead cost is 80,000

but the first thing you screwed up on is, you didn't read the directions, both of these mug things are for the same company

but even more curiously--and here was your first big screwup--you wanted to calculate each individually, and that's not the case here, since they're both for the same company you have to smoosh them together? maybe that's the whole point of the chapter since you're doing VOLUME costing?

in any case, you need to add both of the labor numbers together

80,000 / 16,000 =5

they're both 5

then, you take that 5 and you multiply it by ... well just look

5 x 10,000 = 50,000

5 x 6,000 = 30,000

i.e., applied? allocated? overhead is predetermined overhead rate x cost driver (i.e., labor hours)

then, and here you screwed up again, you have to add the rate + the other costs for each product

5 + 6 + 2 = 13

5 + 8 + 5 = 18

no that can't be right, see, you're f***** up again, but it's right for the first one???? 

oh god damn, since there's a hidden step here, you need to figure out the manufacturing overhead per unit...

no, that's even on there, it's literally the third box down

but let's think about this, manufacturing cost per unit...

just by the way, since I'm back in the video

look at the yellow, you can see that they added the 5000 & the 10000 together to get 15000, which is the same thing that happened with you when you had to add the 10000 & the 6000 together

just by the way

ok, just figured it out

ok what you do is you multiple the direct labor hours by the predetermined overhead rate and then divide that by the units produced

5 x 10000 = 50000 / 10000 = 5

5 x 6000 = 30000 / 4000 = 7.5

and what are these numbers? it's the overhead per unit?

ok so that's the distinction that is messing you up

• manufacturing overhead cost per unit
• manufacturing cost per unit

that makes sense, for example, and this is just using one as an example

5 is the predetermined overhead rate, which you calculated by dividing the estimated overhead cost by the TOTAL labor hours for BOTH products , ie., 80000 / 16000 = 5

then you multiple that by the labor hours (ie., the cost driver) to get : 5 x 6000 = 30000 , which is the total overhead that gets allocated to the particular product

then to get overhead per product you divide that by number of units produced to get : 30000 / 6000 = 7.5

then you add that as a particular costs alongside the other costs

8 (direct materials) + 5 (direct labor) + 7.5 (overhead per unit) = 20.5

then you just subtract that from the selling price to get gross profit or : 25 - 20.5 = 4.5

this question was so traumatizing that I'm going to do it again

predetermined overhead rate = estimated overhead / cost driver

or in this case:

80,000 / 10,000 + 6,000 = 80,000 / 16,000 = 5

then: 

5 x 10,000, 5x6,000

50,000, 30,000

50,000/10,000 = 5

30,000/4,000=7.5

5+6+2=13

7.5+8+5=20.5

20-13=7

25-20.5=4.5

ok you can do it, phew

question 2

question 3

just to recap here, what did you just do?

you were trying to find the total overhead cost allocated to a certain activity, so you..

hold on, I wonder if the cost driver is days worked or something because I can't figure out why we are working in days here

 look at these though, only one is via a day,  so I bet you it's the unit of the cost driver and it changes depending on what the pool is

• day
• design
• batch
• machine hour
• etc.

so it's like activity cost over cost driver units?

well I guess it's the activity rate

so you calculate the activity rate for each activity cost pool? then you multiple the RATE by ... well back up

the rate is the rate in general for the whole cost pool..no..the pool is the whole thing

the rate is the rate in general for the activity, but then you need to isolate the units for the specific activity and then times the general rate by the specific activity to get the cost of the activity in particular

then you just add up all of the particular activity costs to get the total cost of the one specific activity 

question 4

question 5