Question
Bosche Limited manufactures two models of microwaves to cater for different consumers. Model 100 has basic functions, and mainly reheats food. Model 200 is a
Bosche Limited manufactures two models of microwaves to cater for different consumers. Model 100 has basic functions, and mainly reheats food. Model 200 is a more sophisticated model including convention and steam oven options as well as more capacity and power (wattage) and more stylish design and touch settings.
The following overhead cost pools and activity drivers have been determined .
Overhead Cost Pool | Budgeted Overhead Cost | Activity Driver |
Machine set-ups | $300,000 | Number of setups |
Material handling | $120,000 | Number of units of materials used |
Waste control | $20,000 | Kilos of waste |
Quality control inspection | $25,000 | Number of inspections |
Other overhead costs | $180,000 | Labour hours |
15,000 units of the MODEL 100 is produced which have the following production requirements:
No of Machine set-ups | 20 Set-ups |
Materials used | 50,000 units |
Waste produced | 300 kilos |
Number of inspections | 40 inspections |
Labour hours | 1,000 hours |
6,000 units of the MODEL 200 is produced, which have the following production requirements:
No of Machine set-ups | 30 Set-ups |
Materials used | 70,000 units |
Waste produced | 100 kilos |
Number of inspections | 120 inspections |
Labour hours | 500 hours |
Required
1. If Bosche Limited used a single, predetermined overhead rate based on labour hours, calculate the overhead rate per unit to be assigned to each microwave model. Round all calculations and rates to 2 decimal places where applicable.
2. If Bosche Limited was to adopt Activity Based Costing (ABC) use the table below to calculate
(i) The total cost driver and allocation rate for each overhead cost pool
(ii) The total overhead cost allocated to each model for each overhead cost pool
(iii) The overhead cost per unit.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started