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ABC Company produces two types of battery operated toy cars: Sedan and SUV. The cars are produced using one continuous process. Four activities have been
ABC Company produces two types of battery operated toy cars: Sedan and SUV. The cars are produced using one continuous process. Four activities have been identified: machining, setups, receiving and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs and the other related data are as follows: Activity Machining Cost Driver Machine hours Sedan 36,000 SUV 24,000 Costs $ 150,000 Setups # of setups 200 600 $ 52,000 Receiving # of orders 120 480 $ 16,200 Packing # of orders 1,225 2,275 $ 52,500 a) Compute the total overhead assigned to each product by using only machine hours to calculate a plantwide rate. b) Compute the consumption ratio for each activity. c) Compute the overhead rate for each activity using the associated cost drivers. d) Compute the overhead cost assigned to each product using the activity rate calculated in c) above
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