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9. Bilbo Corporation manufactures two products: Product A and Product B. The company uses a plantwide overhead rate based on direct labor-hours. It is considering
9. Bilbo Corporation manufactures two products: Product A and Product B. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B. Activity Cost Pool Activity Measure Total Cost Total Activity Machining Machine-hours $180,000 12,000 Machine-hours Machine Setups # of setups $75,000 150 setups Order size Direct labor-hours $280,000 10,000 Direct labor-hours Activity Measure Product A Product B Machine-hours 9,000 3,000 # of setups 80 70 Direct labor-hours 6,000 4,000
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