Seligram Case

Seligram Case Homework

2. Burden Rate=Total Burden $/Direct Labor $

1) Existing System: One Center System

Product | Direct Labor Cost | Overhead @145% | Total Cost |

ICA | $917 | 1130 | 2247 |

ICB | 2051 | 2974 | 5025 |

CAPACITOR | 1094 | 1586 | 2680 |

AMPLIFIER | 525 | 761 | 1286 |

DIODE | 519 | 753 | 1272 |

Total: $12,510

2) The system proposed by the accounting manager: Two Center System

Product | Direct Labor Cost | Overhead Cost | Overhead (Machine Hours) | Overhead (Direct Labor Cost) | Total Cost |

ICA | $917 | $1,480 | 18.5 | $183 | $2,580 |

ICB | 2051 | 3200 | 40 | 410 | 5561 |

CAPACITOR | 1094 | 600 | 7.5 | 219 | 1913 |

AMPLIFIER | 525 | 400 | 5 | 105 | 1030 |

DIODE | 519 | 960 | 12 | 104 | 1583 |

Total: $12,667

3) The system proposed by the accounting consultant: Three Center System

Product | Direct Labor Cost | Overhead (M/C Hours) | Main (M/C Hours) | Overhead (M/C Hours) | Overhead (DL cost) | Total Cost |

ICA | $917 | $535 | 8.5 | $1,130 | $183 | $2,765 |

ICB | 2051 | 882 | 14 | 2938 | 410 | 6281 |

CAPACITOR | 1094 | 184 | 3 | 509 | 219 | 2011 |

AMPLIFIER | 525 | 252 | 4 | 113 | 105 | 995 |

DIODE | 519 | 441 | 7 | 565 | 104 | 1629 |

Total: $13,681

5. Estimated Overhead/Estimated Machine Hours= (250,000++500,000+75,000)/ (4,000*0.1)

=$2,063

Year | Variable Overhead | Depreciation | Fixed Costs | Total Cost |

1 | $100,000 | $500,000 | $225,000 | $825,000 |

2 | $100,000 | 375,000 | 150,000 | 625,000 |

3 | $100,000 | 281,250 | 150,000 | 531,250 |

4 | $100,000 | 210,000 | 150,000 | 500,000 |

5 | $100,000 | 160,000 | 150,000 | 500,000 |

6 | $100,000 | 160,000 | 150,000 | 500,000 |

7 | $100,000 | 160,000 | 150,000 | 343,750 |

8 | $100,000 | 153,750 | 150,000 | 250,000 |

1) If it is assigned as a separate cost center

Year | Total Cost | Hours | Burden Rate |

1 | $825,000 | $400 | $2,063 |

2 | 625,000 | 1,400 | 446 |

3 | 531,250 | 2,400 | 221 |

4 |...