ACC 561 - Week 4 - Assignment - WileyPLUS 16-3 and 17-1

Exercise 16-3

ledger of Custer Company has the following work in process account.

Production records show that there were 440 units in the beginning inventory, 30% complete, 1,510 units started, and 1,510 units transferred out. The beginning work in process had materials cost of $2,150 and conversion costs of $1,720. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

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Exercise 17-1

Wilkins Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company’s operations.

Total estimated overhead costs are $308,300. Overhead cost allocated to the machining activity cost pool is $198,500, and $109,800 is allocated to the machine setup activity cost pool.

(a)   Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, e.g. 12.25%.)

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(b)Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. $12.25.)

(c)

Determine the difference in allocation between the two approaches. (Round answers to 0 decimal places, e.g. $1,225.)

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