Question
Assume a company that uses activity-based costing (ABC) has only two products A and B. The company does not have any organization-sustaining activities or unused
Assume a company that uses activity-based costing (ABC) has only two products A and B. The company does not have any organization-sustaining activities or unused capacity costs. The companys total manufacturing overhead cost of $56,000 has been allocated to the three activities shown below:
| Setups | Machining | Packing Orders | |||||||||
| Activity measure quantity: Product A | 20 | 1,000 | 150 | ||||||||
| Activity measure quantity: Product B | 20 | ? | 350 | ||||||||
| Overhead cost per activity cost pool | ? | ? | $ | 10,000 | |||||||
| Activity rate | $ | 150 | per setup | $ | 8 | per MH | ? | ||||
If the company decided to use a plantwide overhead rate with machine-hours as the allocation base, what would be its plantwide overhead rate?
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Managerial Economics Theory Applications and Cases
Authors: Bruce Allen, Keith Weigelt, Neil A. Doherty, Edwin Mansfield
8th edition
978-0393124491, 393124495, 978-0039391277, 393912779, 978-0393912777
