1. Comparing ABC and Plantwide Overhead Cost Assignments

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

   Setting up equipment	$760,000
   Other overheard	$4,408,000

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

   	Fudge			Cookies
   Units produced	8,000			445,000
   Setup hours	15,200			3,800
   Oven hours	3,800			26,600

   Required:

   Round your answers to the nearest whole dollar, unless otherwise directed.

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

   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? $______________

   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? $____________

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

   a. different treatment of setup costs b. difference in the units produced c. difference in the sale prices of the products or d. different oven temperatures required for baking fudge and cookies.

   .

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

   $_____________