1. Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year:

Plata produces two models of microwave ovens with the following activity demands:

The company€™s normal activity is 21,000 machine hours.

Calculate the total overhead cost that would be assigned to Model X using an activity-based costing system:

a. $230,000

b. $240,000

c. $280,000

d. $190,000

2. Assume that the inspection activity has an expected cost of $120,000. Expected direct labor hours are 3,000, and expected number of inspections is 600. The best activity rate for inspection is as follows:

a. $40 per inspection

b. $40 per hour

c. $200 per inspection

d. $200 per hour

Transcribed Image Text:

Activity Driver Number of setups Number of orders Machine hours Activity Capacity 300 Expected Cost Activity Setting up equipment Ordering costs Machine costs $120,000 210,000 21,000 Model Y 4,000 Model X 8,000 200 3,000 12,000 Units completed 100 6,000 Number of orders Machine hours 9,000