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	$952,000
Other overheard	$5,400,000

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	13,600	3,400
Oven hours	5,000	35,000

Required:

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

a. Setting up equipment	$ _____ per setup hour
b. Other overhead	$____ per oven hour

2. How much total overhead is assigned to Fudge using ABC? $_____

3. What is the unit overhead assigned to Fudge using ABC?Round to the nearest cent.

$_______per unit

4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours.Round to the nearest cent. $____ per oven hour

5. How much total overhead is assigned to Fudge using the plantwide overhead rate?$___

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