What could management do to reduce the overhead

Reference no: EM13135122

The HITEC Company manufactures multimedia equipment designed to be sold to universities. The companys southeastern plant has undergone production changes that have resulted in decreased usage of direct labor and increased usage of automated processes. As a result, management no longer believes that its overhead allocation method is accurate and is considering changing from a traditional overhead allocation to an activity-based method. The controller has chosen the following activity centers and drivers costs for overhead: Purchase orders Setup Costs Testing costs Machine maintenance Cost Driver Number of orders Number of setups Number of tests Machine hours Overhead Cost Information $200,000 300,000 420,000 800,000 Driver Activity 25,000 15,000 16,000 50,000 Required A. Calculate the overhead rate each cost driver B. An order for 1,000 video projectors had the following requirement Number of purchase orders 3 Number of setups 5 Number of product tests 20 Machine hours 1,500 How much total overhead should be assigned to this order? C. What could management do to reduce the overhead costs assigned to these video projectors? What would be the impact on the net income of reducing overhead assigned to the video projectors?

Reference no: EM13135122

Questions Cloud

What does the current ratio measure : What is the current ratio? What does the current ratio measure? What are reasons for using the current ratio analysis?

Measurement of height of cylinder : The volume of a cylinder(think about the volume of a can)is given by v=pir^2h where r is the radius of the cylinder and h is the height of the cylinder.

Preparing the journal entries problem : Swanson Corporation issued $8 million of 20-year, 8 percent bonds on April 1, 2009, at 102. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2029. Swanson's fiscal year ends on Decemb..

Determine the molecular formula of the compound : a sample of a binary compound of boron and chlorine weighing 2.842 g occupies .153 L. this sample is decomposed to give 0.664 g solid boron and enough gaseous chlorine to occupy .688 L at the same temperature and pressure. determine the molecular ..

What could management do to reduce the overhead : What could management do to reduce the overhead costs assigned to these video projectors? What would be the impact on the net income of reducing overhead assigned to the video projectors?

How much should holcomb recognize as loss on impairment : The machinery has a fair value of $210,000. How much should Holcomb recognize as loss on impairment.

What journal entry should siegle to record this exchange : The equipment had a recorded amount on Mayo's books of $21,000. What journal entry should Siegle make to record this exchange?

Calculate the amount of interest capitalized : On January 2, 2011, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2012. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction.

Intangible assets under us gaap : What amount will be included in intangible assets on the company's December 31, 2008 financial statements prepared in accordance with IFRS? How much would be included in intangible assets under US GAAP?

User Account

All Pages