Cullumber Inc. is a manufacturer of quality shoes. The company has always used a plant-wide allocation rate for allocating manufacturing overhead to its products. The plant manager believes it is time to change to a better method of cost allocation. The accounting department has established the following relationships between production activities and manufacturing overhead costs: Activities Material handling Assembly Inspection Cost Drivers Number of parts Labour hours Time spent by item at inspection station Allocation Rate $6.00 89.00 15.00 per part per hour per minute The previous plant-wide allocation rate method was based on direct manufacturing labour hours, and if that method is used, the allocation rate is $800 per labour hour.

Cullumber inc is a manufacturer of quality shoes. The company has always used a plant-wide allocation rate for allocating manufacturing overhead to its products. The plant manager believes it is time to change to a better method of cost allocation. The accounting department has established the following relationships between production activities and manufacturing overhead costs: The previous plant-wide allocation rate method was based on direct manufacturing labour hours, and if that method is used, the allocation rate is $800 per labour hour. Cullumber inc is a manufacturer of quality shoes. The company has always used a plant-wide allocation rate for allocating manufacturing overhead to its products. The plant manager believes it is time to change to a better method of cost allocation. The accounting department has established the following relationships between production activities and manufacturing overhead costs: The previous plant-wide allocation rate method was based on direct manufacturing labour hours, and if that method is used, the allocation rate is $800 per labour hour