Chico Motor Works identified the following data in its two production departments.

Required

What is the company's single plantwide overhead rate based on direct labor hours?

What are the company's departmental overhead rated if the assembly department

assigns overhead based on direct labor hours and the finishing department assigns

overhead based on machine hours?

In the blank next to the following terms, place the letter A through $G$

corresponding to the best description of that term.

Unit level activity

activity driver

A$.$ A task that must be performed for each unit produced.

batch level activity

cost object

plantwide $OH$ rate

B$.$ A group of costs that have the same activity drivers.

C$.$ Anything to which costs will be assigned.

D$.$ Tasks that are performed for each group of units such as a

production run or lot.

cost pool

E$.$ An activity that causes a cost to be incurred.

F$.$ Measurement associated with an activity.

G$.$ A single factor used to apply indirect manufacturing costs

in all departments.

Compute the ABC activity rate for each of the following overhead activities:Please complete Discussion Questions as follows:

You can insert lines and a text box for typing purposes.

I. What is the first step in applying activity$-$based costing?

II$.$ If plantwide overhead rates are allowed for reporting costs to external users, why

might a company choose to use a more complicated and more expensive method for

assigning overhead costs to products?

III Activity$-$based costing is generally considered more accurate than other methods of

assigning overhead. If this is so$,$ why do all manufacturing companies not use it$?$

IV$.$ Why are overhead costs allocated to products and not individually traced to products

as direct materials and direct labor are?

V$.$ The usefulness of overhead allocations based on a single plantwide overhead rate

depends on two critical assumptions. What are those assumptions?