Outer Limits, Inc Outer Limits' Total Expected Overhead Costs and Related Overhead Data

question 221

Essay

Outer Limits, Inc. produces fencing units which require two processes, A and B, to complete. The best-selling type of fence is made of PVC. Information related to the 8,000 units of pvc fencing produced annually is shown below.

$$\begin{array} { | c | c | } \hline \text { Direct materials } & \$ 450,000 \\\hline \text { Direct labor } & \\\hline \text { Department A (5,000 DLH x } \$ 23 \text { per DLH) } & \$ 115,000 \\\hline \text { Department B (4,000 DLH x } \$ 25 \text { per DLH) } & \$ 100,000 \\\hline \text { Machine hours } & \\\hline \text { Department A } & 2,000 \mathrm { MH } \\\hline \text { Department B } & 3,000 \mathrm { MH } \\\hline\end{array}$$

Outer Limits' total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on machine hours in department A and direct labor hours in department B.

$$\begin{array} { | l | l | l | } \hline & \text { Department A } & \text { Department B } \\\hline \text { Direct labor hours } & 9,000 \mathrm { DLH } & 7,000 \mathrm { DLH } \\\hline \text { Machine hours } & 6,500 \mathrm { MH } & 13,000 \mathrm { MH } \\\hline \text { Manufacturing overhead costs } & \$ 54,600 & \$ 67,060 \\\hline\end{array}$$
Determine the total amount of overhead assigned to each unit of PVC fencing.

Understand the financial statement presentation of long-lived assets and related expenses.

Distinguish between various types of intangible assets and their classifications.

Calculate the cost of land and buildings considering acquisition and improvement costs.

Understand the concept and application of depreciation, amortization, and impairment losses.

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Definitions:

Symbolic Interaction

A perspective in sociology that focuses on the significance of symbols, language, and interaction in the construction of social reality.

Cognitive Capacity

Refers to the total amount of information the brain is capable of retaining and processing, determining mental abilities such as learning, thinking, and problem-solving.

Symbolic Interactionism

A sociological perspective focusing on the roles that symbols and language play in the formation of self and society.

Cognitive Bias

A systematic pattern of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.