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Fancy Foods produces gourmet gift baskets that it distributes online as well as from its small retail store. The following details about overhead costs are
Fancy Foods produces gourmet gift baskets that it distributes online as well as from its small retail store. The following details about overhead costs are taken from its records. Production Activity Wrapping. Assembling Product design.. Obtaining business licenses Cooking.. Indirect Labor $300,000 400,000 180,000 150,000 Indirect Materials Other Overhead $200,000 $100,000 120,000 Additional information on the drivers for its production activities follows. Required Wrapping. 100,000 units Assembling. Product design 20,000 direct labor hours Obtaining business licenses Cooking... 3,000 design hours 20,000 direct labor hours 1,000 batches 1. Compute the activity overhead rates using ABC. Form cost pools as appropriate. 2. Determine the overhead costs to assign to the following jobs using ABC. Holiday Basket 8,000 units 2,000 DLH Number of units Direct labor hours. Design hours.. Batches... 40 design hours 80 batches Executive Basket 1,000 units 500 DLH 40 design hours 200 batches 3. What is the overhead cost per unit for the Holiday Basket? What is the overhead cost per unit for the Executive Basket? 4. If the company used a plantwide overhead rate based on direct labor hours, what is the overhead cost for each Holiday Basket unit? What would be the overhead cost for each Executive Basket unit if a single plantwide overhead rate is used? 5. Compare the overhead costs per unit computed in requirements 3 and 4 for each job. Which cost as- signment method provides the most accurate cost? Explain
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