Question
Alphabet Company has identified 4 different activity pools for its overhead costs, allocated costs to each pool, estimated activity levels, and computed activity rates as
Alphabet Company has identified 4 different activity pools for its overhead costs, allocated costs to each pool, estimated activity levels, and computed activity rates as summarized in the following tables:
Estimated activity levels for the year | ||
Pool 1 | Number of setups | 1000 |
Pool 2 | Inspection hours | 3000 |
Pool 3 | Machine hours | 15000 |
Pool 4 | Number of parts | 8000 |
Direct labor hours | 13500 | |
Direct materials cost | 560000 |
Pool 1 | Pool 2 | Pool 3 | Pool 4 | |
Setups | Inspections | Grinding | Receiving | |
Supervisory Salaries | $22500 | $33000 | $81000 | $13500 |
All other costs | $17500 | $42000 | $84000 | $26500 |
Total costs | $40000 | $75000 | $165000 | $40000 |
Activity rate: | $40 | $25 | $11 | $5 |
One of Alphabet's product lines required the following inputs during the year: 290 Direct labor hours $11220 Direct materials cost 80 Inspection hours 200 Machine hours 180 Parts 40 Setups The labor rate is $20/hour. 1. Compute the amount of overhead allocated to this product line assuming activity based costing. 2. Compute the total cost of this product line assuming activity based costing. 3. Compute the amount of overhead allocated to the product line assuming INSTEAD that overhead is allocated using a plantwide-rate based on direct labor hours. (Round the rate to the nearest dollar.)
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