00:03
Address the issue on declining profits and assesses the accuracy of the costing system at marie we can calculate the overhead cost allocation for the flexible and rigid models based on the provided information.
00:22
Go to address the issue of to address the issue of declining profits and assess the accuracy of the says the accuracy of costing system at marie we can calculate the overhead cost allocation for the flexible and rigid model based on the provided information.
01:26
So by comparing the allocated overhead cost with the actual cost incurred, you can determine the current costing system if the current costing system is causing any accuracy.
01:38
So let's calculate the overhead cost allocation for each model overhead cost allocation.
01:44
So first is flexible model number of units produced and sold is thousand directly work but our per unit hours per unit is 3 .0.
02:24
But all units produced.
02:33
How's it? that is labor hours per unit per unit is 1 0 total direct labor hours thousand units into 3 .0 hour which is equal to 3000.
03:19
Our rigid model number of minutes produced and sold number of units produced and sold is 12 ,500.
03:49
Direct labor hours per unit total direct labor hours equals to 10 ,500 into 1 .50 hours, which is equals to 18 ,000.
04:44
They went for our we need to calculate the overhead allocation rate for direct labor are so overhead cost estimated for the year is dollar for the year is total eight lakh seventy thousand okay, directly was for both models is 8000 are just flexible plus 18 ,000 750 hours that is rigid is equals to 21 ,000 750 hours.
06:43
So over an allocation rate for direct labor are equals to overhead allocation rate for direct labor are dollar eight lakh seventy thousand divided by 21 750 hours which is equals to dollar 40 or direct labor or direct.
07:56
Finally, we can calculate the overhead cost allocation for each model...