Good Earth Bakery traditionally has allocated manufacturing overhead to its product line usObj. 4 ing raw material weight as a cost driver. Assume the dough and other ingredients for one loaf weigh one pound. While evolving into an activity-based costing system, Good Earth explored the use of different cost drivers. The following data summarize overhead application drivers and rates for the traditional and activity-based cost systems.

Traditional: \(\$ 0.95\) per pound Activity-based cost:

\(\$ 75\) per oven hour

\(\$ 50\) per blender setup (The blender is cleaned before each batch of product.)

a. Calculate the overhead cost per loaf to manufacture whole wheat bread and raisin bread using the activity-based cost method.

b. Identify the types of overhead cost pools (unit, batch, product, or facility) added by the Good Earth Bakery.

c. Explain why the traditional and \(\mathrm{ABC}\) methods produce different results.

Transcribed Image Text:

Oven time Batch size Whole Wheat Bread 1/2 hour 100 loaves Raisin Bread 3/4 hour 50 loaves