Long Ave Inc. manufactures two products, Standard and Deluxe. Manufacturing overhead costs

consist of:

Activity Overhead Cost

Setting Up Machines $245,000

Machine Fabrication $540,000

Inspecting $475,000

Shipping $765,000

Purchasing $330,000

Information on the two products is as follows:

Cost Driver Standard Deluxe

Direct Labour Hours 340,000 140,000

Machine Setups 270 450

Machine Hours 33,500 44,500

Inspections 445 280

Parts Shipped 6,750 8,450

Purchasing Orders 395 290

Currently, the controller uses a plant-wide overhead rate based on direct labour hours to assign

overhead to the Standard and Deluxe products. The president has heard of activity-based

costing and wants to see how the results would differ if this system were used.

Would you be able to help me with the following?

1. Assign the total manufacturing overhead costs to the two products using the current plantwide

method.

2. Assign the total manufacturing overhead costs to the two products using activity-based

costing (ABC).