Lonsdale, Inc, manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated costs and cost drivers are as follows:

Activities Cost Cost Driver

Casting 570,000 Machine Hours

Assembly 80,000 Direct Labor Hours

Inspecting 42,000 Number of Inspections

Setup 38,000 Number of Setups

Materials Handling 23,750 Number of Loads

The production data and cost driver usage for the two products is as follows:

Activity Base Entry Dining Total

Machine Hours 6,000 13,000 19,000

Direct Labor Hours 3,000 2,000 5,000

Number of Inspections 600 400 1,000

Number of Setups 300 200 500

Number of Loads 450 500 950

Units Produced 6,000 3,000 9,000

1.Calculate the predetermined overhead rate using a plant-wide rate based on direct labor hours and calculate the unit cost of overhead for each product.

2.Calculate the predetermined overhead rate using activity-based rates based on the cost driver for each activity and calculate the unit cost of overhead for each product.

3.Which method provides the more accurate cost for overhead?