B/6021 B6021 B 6021 WEEK 2 ASSIGNMENT
- argosy-university / B 6021
- 25 May 2018
- Price: $10
- Other / Other
B 6021 WEEK 2 ASSIGNMENT
Assignment
Assignment 2: Manufacturing Overhead
Borealis Manufacturing
has just completed a major change in its quality control (QC) process.
Previously, products had been reviewed by QC inspectors at the end of each
major process, and the company's 10 QC inspectors were charged to the operation
or job as direct labor. In an effort to improve efficiency and quality, a
computerized video QC system was purchased for $250,000. The system consists of
a minicomputer, fifteen video cameras, and other peripheral hardware and
software. The new system uses cameras stationed by QC engineers at key points
in the production process. Each time an operation changes or there is a new
operation, the cameras are moved, and a new master picture is loaded into the
computer by a QC engineer. The camera takes pictures of the units in process,
and the computer compares them to the picture of a “good” unit. Any differences
are sent to a QC engineer, who removes the bad units and discusses the flaws
with the production supervisors. The new system has replaced the 10 QC
inspectors with two QC engineers.
The operating costs of
the new QC system, including the salaries of the QC engineers, have been
included as factory overhead in calculating the company's plant-wide
manufacturing-overhead rate, which is based on direct-labor dollars. The
company's president is confused. His vice president of production has told him
how efficient the new system is. Yet there is a large increase in the overhead
rate. The computation of the rate before and after automation is as follows:
|
|
Before |
After |
|
Budgeted Manufacturing
Overhead |
1,900,000 |
2,100,000 |
|
Budgeted Direct Labor Cost |
1,000,000 |
700,000 |
|
Budgeted Overhead Rate |
190% |
300% |
“Three hundred percent,”
lamented the president. “How can we compete with such a high overhead rate?”
Using the module readings
and the Argosy University online library resources, research manufacturing
overhead.
Review the situation.
Complete the following:
·
Define
“manufacturing overhead,” and:
o
Cite
three examples of typical costs that would be included in manufacturing
overhead.
o
Explain
why companies develop predetermined overhead rates.
·
Explain
why the increase in the overhead rate should not have a negative financial
impact on Borealis Manufacturing.
·
Explain
how Borealis Manufacturing could change its overhead application system to
eliminate confusion over product costs.
·
Describe
how an activity-based costing system might benefit Borealis Manufacturing.
USA 
India