Ratchford Clocks Manufactures Alarm Clocks and Wall Clocks and Allocates

question 46

Short Answer

Ratchford Clocks manufactures alarm clocks and wall clocks and allocates overhead based on direct labor hours. The production process is set up in three departments: Assembly, Finishing, and Calibrating. The following is information regarding the direct labor used to produce one unit of the two clocks:
The budget includes the following factory overhead by department:
Ratchford Clocks is planning to manufacture 50,000 alarm clocks and 10,000 wall clocks.
(a) Determine the total number of hours that will be needed by department.
(b) Determine the factory overhead rate by department using the multiple production department factory overhead rate method.
(c) Determine the amount of factory overhead to be allocated to each unit of alarm clocks and wall clocks.
(d) Determine the amount of total factory overhead to be allocated to the alarm clocks and wall clocks.

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Definitions:

Multiple Subsidiary

A business structure wherein a single parent company owns several subsidiary companies.

Inter-Entity Transactions

Inter-entity transactions refer to the economic exchanges between different entities within the same corporate structure, often requiring elimination during consolidation for accurate financial reporting.

NCI

Non-Controlling Interest, a stake in a company that is not sufficient to yield control over the company, representing ownership by minority shareholders.

Profit

The financial gain derived from a transaction or the operation of a business after subtracting expenses.