Showing Relevant Calculations for Verifying the Firm’s Plant Wide Rate

Discuss about the Efficient Optimal Algorithm of Task Scheduling in Cloud Computing.

Production overhead is comprised of the following costs
Description of cost	Amount
Factory overhead related to machine activity Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	$  42,725.00
Set-up costs	$    8,725.00
Cost of handling materials	$  11,725.00
Administration costs for spare parts	$  12,725.00
Total overhead expenses	$  75,900.00

Expenses	W	Z
Vol of production	600.00	7,100.00
Machine hours	0.50	1.75
Total hours	300.00	12,425.00
Total hours in overhead cost machine	12,725.00

Particulars	Amount
Total overhead expenses	$  75,900.00
Total hours in overhead cost machine	$  12,725.00
Plant Wide rate	$             5.97

Particulars	Value
Factory overhead related to machine activity	$  42,725.00
Machine hours	$  12,725.00
Machine hour per unit	$            3.36

Particulars	Value
Set-up costs	$    8,725.00
No of set-ups	11.00
Set-up-cost rate	$        793.18

Particulars	Value
Cost of handling materials	$  11,725.00
No. of times material was handled	16.00
Cost of handling materials per machine	$        732.81

Particulars	Value
Administration costs for spare parts	$  12,725.00
No. of spare parts	8.00
Administration costs for spare parts per spare part	$    1,590.63

Particulars	W	Z
Plant Wide rate	$            5.97	$            5.97
Total hours	300.00	12,425.00
Overhead under plant wide rate	$    1,792.39	$  74,234.86

Particulars	W	Z
Machine hours	0.50	1.75
Machine hour per unit	3.36	3.36
Vol of production	600.00	7,100.00
Set-up-cost rate	793.18	793.18
No. of set-ups	2.00	9.00
Cost of handling materials per machine	732.81	732.81
No. of times material was handled	3.00	13.00
Administration costs for spare parts per spare part	1,590.63	1,590.63
No. of spare parts	3.00	5.00
Overhead applied under ABC Method	$          9,564	$        66,336

There is significant difference between the allocated cost of product-wide rates and ABC rates, as both the method are used in calculating the cost incurred in the production system. With the help of both the cost derivation method organizations are able to identify relevant expenses in their production line according to activity and product wide. This mainly provides the organization with adequate measure to detect the actual expenses incurred in the production process. according to which the organization is able to identify the cost of the product and selling price allows the company to generate higher revenues from production. The calculation of overhead is relatively helpful to identify the actual extra expenses incurred by the company to complete the production process. both the processes directly segment the overhead cost according to the production wise and activity wise method (Dale and Plunkett 2017).

Plant-wide overhead rate is a process where single rate is used to allocate the company’s manufacturing overhead cost to the production output. This relevant measure does not allow the organization to segregate the production output in different forms, where one overhead cost is distributed among all the products produced by the company. The indirect cost can be identified as the expenses conducted by the organization to smoothly complete the production process such as electricity, maintenance, depreciation, repairs, and supervision etc. This method is a relatively calculated on a single read basis which does not allow the organization to identify the expenses incurred in different processes or activities. In this context, Durgun and Ertan (2014) stated that with the help of plant-wide calculation organizations able to segregate equal expenses of the overhead to the different product lines, which has single cost effect on each product. On the other hand, Gama, Azzoni and Freitas (2018) criticizes that plant wide calculation method does not allow the company to derive the actual cost incurred from each operation, which reduces their competitiveness in the market.

The problems identified in plant-wide overhead rate is compensated by activity-based costing system, which allows the organization to identify the actual cost of the production unit. The process is relatively conducted to identify separate cost in each activity which is associated with the adequate product of the company. This relatively allow the organization to identify the actual cost of a product and the rate of selling price which it needs to price at to generate profits from the transaction. Moreover, Christopher (2016) stated that activity-based costing allowed organization to segregate the cost of overhead incurred by the company on different products, which increases the competitiveness in the market as per the price level. However, Weygandt, Kimmel and Kieso (2015) argued that Activity based costing needs higher expending on part of your organization, as the process is complicated, which raises their expenses.

Showing Relevant Calculations Regarding Activity-Based Costing

The plant wide rate is mainly calculated by adding all the overhead incurred by the organization, which is at the level of $75,900. Moreover, the total overhead hours used in the machine is also calculated, which is at the levels of 12,725. In addition, the plant-wide rate is calculated by dividing the total overhead cost with total hours of machine worked, which comes at the level of $5.97. This relevantly depicts the overall overhead cost per unit that is priced by the company at the level of $5.97. On the other hand, the calculation for activity-based costing is relevantly different from plant-wide cost. The activity-based costing is relatively calculated on each overhead activity, which is conducted by the organization for completing its production process. This relevant identification of cost incurred in each activity is mainly conducted by dividing the overall cost with their specific activity. The Factory overhead related to machine activity is divided by Machine hours, which derive the rate of $3.36 per unit. In addition, the set-up cost is divided by no of set-ups conducted by the company, which is calculated at the levels of $793.18. Moreover, the cost incurred from Cost of handling materials is divided by No. of times material was handled, which gives the expenses at $732.81 per machine. Lastly, the cost for Administration costs for spare parts is divided by No of spare parts to get the cost of Administration costs for spare parts per spare part, which is at the levels of $1,590,63. These derived costs relevantly allow the organization to detect the actual expenses incurred by the company, while conducting the production process.

Reference and Bibliography:

Agarwal, D. and Jain, S., 2014. Efficient optimal algorithm of task scheduling in cloud computing environment. arXiv preprint arXiv:1404.2076.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

da Gama Ferreira, R., Azzoni, A.R. and Freitas, S., 2018. Techno-economic analysis of the industrial production of a low-cost enzyme using E. coli: the case of recombinant β-glucosidase. Biotechnology for biofuels, 11(1), p.81.

Dale, B.G. and Plunkett, J.J., 2017. Quality costing. Routledge.

Dong, J., Liu, C. and Lin, Z., 2014. Charging infrastructure planning for promoting battery electric vehicles: An activity-based approach using multiday travel data. Transportation Research Part C: Emerging Technologies, 38, pp.44-55.

Durgun, I. and Ertan, R., 2014. Experimental investigation of FDM process for improvement of mechanical properties and production cost. Rapid Prototyping Journal, 20(3), pp.228-235.

Rodrigues, A.I., Gudiña, E.J., Teixeira, J.A. and Rodrigues, L.R., 2015. Development of low-cost culture media for effective biosurfactant production. SINAFERM 2015 XX Simpósio Nacional de Bioprocessos, pp.1-5.

Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., 2015. Financial & managerial accounting. John Wiley & Sons.