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Leader Corporation manufactures two products: Product Alfa and Product Beta. The company uses a plantwide overhead rate based on direct labor-hours. It is considering
Leader Corporation manufactures two products: Product Alfa and Product Beta. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Alfa and Beta. Activity Cost Pool Activity Measure Total Cost Total Activity 9,000 MHs Machining Machine-hours S207,000 Number of setups $ 140,000 350 setups Machine setups Product design Order size Number of products 98,000 Direct labor-hours 340,000 10,000 DLH s Activity Measure Product Alfa Product Beta Machine-hours 6,000 3,000 Number of setups 190 160 Number of products Direct labor-hours 4,000 6,000 Required: 1. Compute the plantwide (POHR) overhead rate. 2. Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product Alfa? 3. Using the ABC system, compute the activity rate for each activity cost pool. 4. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Alfa? 2products
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