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Health Food company produces two exclusive products: food package to lose weight and food package to stabilize weight. The company has the following actual and
Health Food company produces two exclusive products: food package to lose weight and food package to stabilize weight. The company has the following actual and budgeted data: Budgeted overhead Expected activity (DLH) Actual activity (DLH) Actual overhead $360,000 100,000 100,000 $380,000 Units produced Prime costs Direct labor hours Food package to lose weight 10,000 78,000 10,000 Food package to stabilize weight 100,000 738,000 90,000 Required: a. Please calculate the pre-determined overhead rate! (5 points) b. What is your opinion if Health food company use Activity based costing (ABC)? Is it possible? Please explain by providing illustrations of the activities, cost drivers, and calculations! (5 Points)
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