Question

Turbo Champs expects to produce 20 custom-built motorcycles for the year. The motorcycles are expected to require 100 inspections, 40 setups, and 100 machine hours. Requirements Compute the predetermined overhead allocation rate for each activity. Compute the expected indirect manufacturing cost of each motorcycle.

Answer 1

Answer:

1. $667

2. $1,685 per custom built motorcycle

Explanation:

Note: The full question is attached

1. Particulars        Budgeted   Allocation  Predetermined overhead rate

                                 cost         Base Unit    (Budgeted cost+Base unit)

Inspection           $5,700            100                   $57

Machine setup    $22,000          40                    $550

M. Maintenance  $6,000           100                   $60

                            $33,700                                    $667

2. Expected indirect manufacturing cost = Total budgeted ovehead cost / Expected total production

= $33,700 / 20 motorcycle

= $1,685 per custom built motorcycle