Comparing ABC and Plantwide Overhead Cost Assignments

Castle Dale Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs:

Line Item Description	Amount
Setting up equipment	$260,000
Other overheard	$2,912,000

Setting up equipment is based on setup hours, and other overhead is based on oven hours. Castle Dale produces two products, Fudge and Cookies. Information on each product is as follows:

Line Item Description	Fudge	Cookies
Batches produced	16,000	890,000
Setup hours	4,000	1,000
Oven hours	2,600	18,200

Required:

1. Calculate the activity rate for (a) setting up equipment and (b) other overhead.

Line Item Description	Activity rate
a. Setting up equipment	$fill in the blank 1 per setup hour
b. Other overhead	$fill in the blank 2 per oven hour

2. How much total overhead is assigned to Fudge using ABC? fill in the blank 1 of 1$

3. What is the unit overhead assigned to Fudge using ABC? Round to the nearest cent. fill in the blank 1 of 1$per unit

4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours. Round to the nearest cent. fill in the blank 1 of 1$ per oven hour

5. How much total overhead is assigned to Fudge using the plantwide overhead rate? fill in the blank 1 of 1$

6a. The difference in the total overhead assigned to Fudge is different under the ABC system and nonABC system because

different treatment of setup cost.difference in the Batches produced.difference in the sale prices of the products.different oven temperatures required for baking fudge and cookies.

.

6b. What is the difference in total overhead assigned to fudge under the two methods?