Nash Company Manufactured Two Products,A and B,during April The Number of Labor Hours Required to Manufacture Each of Product

question 37

Essay

Nash Company manufactured two products,A and B,during April.For purposes of product costing,an overhead rate of $2.50 per direct-labor hour was used,based on budgeted annual factory overhead of $500,000 and 200,000 budgeted annual direct-labor hours,as follows:
$$\begin{array} { | c | r | r | } \hline & \begin{array} { r } \text { Budgeted } \\\text { Qverhead }\end{array} & \begin{array} { r } \text { Buogeted } \\\text { Houss }\end{array} \\\hline \text { Department 1 } & \$ 300,000 & 100,000 \\\hline \text { Department 2 } & 200,000 & 100,000 \\\hline \text { Total } & \underline { \$ 500,000 } & \underline { 200,000 } \\\hline\end{array}$$
The number of labor hours required to manufacture each of these products was:
$$\begin{array} { | c | c | c | } \hline & \text { Product } A & \text { ProductB } \\\hline \text { In Department 1 } & 3 & 1 \\\hline \text { In Department 2 } & \underline { 1 } & \underline { 3 } \\\hline \text { Total } & 4 & 4 \\\hline\end{array}$$
During April,production units for products A and B were 1,000 and 3,000.
Required:
(1)Using a plant-wide overhead rate,what are total overhead costs assigned to products A and B,respectively?
(2)Using departmental overhead rates,what are total overhead costs assigned to products A and B,respectively?
(3)Assume that materials and labor costs per unit of Product A are $10 and that the selling price is established by adding 40% of absorption costs to cover profit and selling and administrative expenses.What difference in selling price would result from the use of departmental overhead rates?

Analyze the implications of research findings based on the stated hypotheses.

Understand the relationship between hypotheses and research methodologies.

Understand the concepts and applications of different job design techniques including job rotation, job enlargement, and job enrichment.

Recognize the principles and objectives of the job characteristics model developed by Richard Hackman and Greg Oldham.

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Definitions:

Marginal Cost

The additional cost incurred from producing one more unit of a good or service.

Moral Hazard

The situation where one party in an agreement is tempted to take undue risks because the negative consequences of the risk will be suffered by the other party.

Efficient Level

The optimal point of production or operation where costs are minimized and productivity or utility is maximized.

Warranty

A guarantee, usually made by a seller to a buyer, promising to repair or replace a product if necessary within a specified period.