Tangipahoa Manufacturing Uses Departmental Cost Driver Rates to Apply Manufacturing

question 98

Essay

Tangipahoa Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products.Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labor dollars in the Assembly Department.At the beginning of 2007,the following estimates were provided for the coming year:

The accounting records of the company show the following data for Product #A273:

Required:
a.Compute the predetermined manufacturing overhead cost driver rate for each department.
b.Compute the total cost of Product #A273.
c.Provide possible reasons why Tangipahoa Manufacturing uses two different cost drivers.

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Definitions:

Needs

Essential requirements for individuals to live a healthy and satisfactory life, including physiological, safety, love/belonging, esteem, and self-actualization needs.

Motivational Strategy

Techniques or plans designed to inspire individuals or groups to achieve a goal or perform at their best.

Expectancy Theory

A theory of motivation that states an individual's willingness to exert a high level of effort is based upon their expectation that it will lead to desired performance goals.

Frederick Herzberg

An American psychologist best known for developing the Motivation-Hygiene Theory, which suggests that certain factors in the workplace lead to job satisfaction, while a separate set of factors cause dissatisfaction.