Question
Gwynnie Pie Company makes dessert pies for national fast food chains. Gwynnie Pie Company is considering using ABC costing and has the following activity cost
Gwynnie Pie Company makes dessert pies for national fast food chains. Gwynnie Pie Company is considering using ABC costing and has the following activity cost pools and information available:
Activities | Estimated Overhead Costs | Estimated Activity |
Material handling measured by batches | $252,000 | 2,400 batches |
Mixing measured by batches | $115,000 | 3,680 batches |
Packaging measured by units | $76,000 | 1,900,000 units |
Maintenance measured by # of setups | $15,000 | 260 setups |
Gwynnie Pie Company currently uses a plantwide overhead rate based on total estimated machine hours of 100,000 hours. The following information was gathered regarding Job 607:
# of units in the job = 5,300
# of units in each batch = 1,060
# of setups required to complete the job = 1
# of machine hours = 220
How much would the overhead be overcosted or undercosted if Gwynnie Pie Company continues to use the plantwide overhead rate as opposed to using ABC Costing?
A. $1,007.60 overcosted
B. $950.94 undercosted
C. $56.66 overcosted
D. $57.69 undercosted
Please help me with this question. Thank you
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