1. Determine a plantwide overhead rate based upon direct labor hours. Direct labor overhead rate: $ X per direct labor hour is $420,000 and $294,000 for the Subassembly and Final Assembly departments, respectively. Allocate overhead using a single plantwide rate, multiple department rates, and activity-based costing Big Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows: The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigr The activity-base usage quantities and units produced for the two products follow: 6. Determine the total and per-unit cost assigned to each product under activity-based costing. Round the per unit amounts to the nearest whole cent. and activity-based costing. The plantwide overhead method allocates $ X of overhead to each product, while the multiple production department method allocates \$ X overhead to receivers and $ X to loudspeakers. Both the plantwide and multiple production department overhead methods distort the allocation of overhead because they for how each product consumes overhead. In contrast, activity based costing allocates $ X of factory overhead to receivers and $ X to loudspeakers. Activity-based costing accurately allocates factory overhead because ! for how each product consumes overhead. Loudspeakers have setups than do receivers. In addition, loudspeakers require quality control inspections than do receivers. As a result, loudspeakers have activity costs than receivers. Feedback V Check My Work 1. Calculate plantwide factory overhead rate: Factory Overhead Total Activity Base = Plantwide factory overhead rate 2. Calculate for each product: Activity-Base Usage x Overhead Rate from Req. (1) = Activity Cost for each Activity Then sum all activity costs per product to determine a total and divide the total overhead by units to derive the overhead per unit for each product. 3. Calculate for each department: Overhead Department Base = Department Rate 4. Calculate for each product: each product. 1. Determine a plantwide overhead rate based upon direct labor hours. Direct labor overhead rate: $ X per direct labor hour is $420,000 and $294,000 for the Subassembly and Final Assembly departments, respectively. Allocate overhead using a single plantwide rate, multiple department rates, and activity-based costing Big Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows: The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigr The activity-base usage quantities and units produced for the two products follow: 6. Determine the total and per-unit cost assigned to each product under activity-based costing. Round the per unit amounts to the nearest whole cent. and activity-based costing. The plantwide overhead method allocates $ X of overhead to each product, while the multiple production department method allocates \$ X overhead to receivers and $ X to loudspeakers. Both the plantwide and multiple production department overhead methods distort the allocation of overhead because they for how each product consumes overhead. In contrast, activity based costing allocates $ X of factory overhead to receivers and $ X to loudspeakers. Activity-based costing accurately allocates factory overhead because ! for how each product consumes overhead. Loudspeakers have setups than do receivers. In addition, loudspeakers require quality control inspections than do receivers. As a result, loudspeakers have activity costs than receivers. Feedback V Check My Work 1. Calculate plantwide factory overhead rate: Factory Overhead Total Activity Base = Plantwide factory overhead rate 2. Calculate for each product: Activity-Base Usage x Overhead Rate from Req. (1) = Activity Cost for each Activity Then sum all activity costs per product to determine a total and divide the total overhead by units to derive the overhead per unit for each product. 3. Calculate for each department: Overhead Department Base = Department Rate 4. Calculate for each product: each product