Daisy Bakeries is a medium- sized bakery producing four lines of products: bread, cakes, pies, and cookies. It is currently charging its $750,000 of overhead to the product lines based on the number of direct labor hours used. Its owner, Rhonda Daisy, recently went to a Small Business Association meeting where she attended a presentation on ABC. Rhonda wants to see if ABC makes any sense for her business. She has done a basic study to identify her key activities and their costs. She has also identified how much of each cost goes to each product line. This information is contained in the following two tables.    

REQUIRED:

a. Using direct labor hours as your driver, calculate how much overhead is currently being charged to each of the product lines.

b. Calculate the amount of overhead per unit for each of the product lines.

c. Calculate the activity rates for each of the ABC drivers noted.

d. Charge out overhead using the ABC rates.

e. Calculate total overhead by product line.

f. Calculate overhead by unit made for each of the product lines.

g. What does this information tell you? What specific recommendations would you make to Rhonda regarding Daisy Bakeries?

Transcribed Image Text:

Daisy Bakeries Activity Number Driver Dollars Blend batter 4,400 Machine hours $132,000 Bake 8,050 Baking hours $362,250