Question 1

Timberwolves Manufacturing produces two (2) types of basketballs: adult size and children size. The basketballs are produced by using one continuous process. Four activities have been identified: machining, set-ups, receiving and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs and the other related data are as follows:

Product	Machine Hours	Set-Ups	Receiving Orders	Packing Orders
Adults	10,000	250	800	1,550
Childrens	10,000	150	200	1,200
Costs	$95 000	$26 000	$16 000	$27 000

Required:

1. Calculate the total overhead assigned to each product by using only machine hours to calculate a plant-wide rate.

[4 marks]

1. Calculate consumption ratios for each activity. (Note:Round to two significant digits)

[4 marks]

1. Calculate a rate for each activity by using the associated driver.

[5 marks]

1. Assign the overhead costs to each product by using the activity rates computed in requirement c.

[5 marks]

1. Comment on the difference between the assignment in requirement a. and the activity-based assignment.