PROBLEM A)

Comparing ABC and Plantwide Overhead Cost Assignments Castle Dale Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs: Setting up equipment $912,000 Other overheard $3,480,000 Setting up equipment is based on setup hours, and other overhead is based on oven hours. Castle Dale produces two products, Fudge and Cookies. Information on each product is as follows: Fudge Cookies Batches produced 16,000 890,000 Setup hours 15,200 3,800 Oven hours 3,000 21,000 Required: 1. Calculate the activity rate for (a) setting up equipment and (b) other overhead. a. Setting up equipment $- J per setup hour b. Other overhead $- V per oven hour 2. How much total overhead is assigned to Fudge using ABC? _x 3. What is the unit overhead assigned to Fudge using ABC? Round to the nearest cent. $:] per unit 4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours. Round to the nearest cent. $:] per oven hour 5. How much total overhead is assigned to Fudge using the plantwide overhead rate? $l:] 63. The difference in the total overhead assigned to Fudge is different under the ABC system and nonABC system because 6b. What is the difference in total overhead assigned to fudge under the two methods? $:] The Receiving Department has three activities: unloading, counting goods, and inspecting. Unloading uses a forklift that is leased for $19,500 per year. The forklift is used only for unloading. The fuel for the forklift is $3,800 per year, Other operating costs (maintenance) for the forklift total $1,500 per year. Inspection uses some special testing equipment that has depreciation of $4,000 per year and an operating cost of $1,500. Receiving has three employees who have an average salary of $40,000 per year. The work distribution matrix for the receiving personnel is as follows: Percentage of Time on Each Acti ity Unloading 40% Counting 25% Inspecting 35% No other resources are used for these activities. Required: 1. Calculate the cost of each activity. Unloading 35:] Inspecting 34: 2. Explain the two methods used to assign costs to activities. When the resource is used only by one activity, then V is possible. When the activities are shared, as in the case of labor, then ' must be used