Question
Sheridan, Inc. produces two types of gas grills: a family model and a deluxe model. Sheridans controller has decided to use a plantwide overhead rate
Sheridan, Inc. produces two types of gas grills: a family model and a deluxe model. Sheridans controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the companys operations:
Family Model | Deluxe Model | |||
---|---|---|---|---|
Direct labor costs | $ 76,500 | $ 153,000 | ||
Machine hours | 2,000 | 2,000 | ||
Setup hours | 200 | 800 |
Total estimated overhead costs are $ 459,000. Overhead cost allocated to the machining activity cost pool is $ 275,400 and $ 183,600 is allocated to the machine setup activity cost pool.
(a)
Correct answer icon
Your answer is correct.
Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 15.25.)
Overhead rate | $ enter the overhead rate in dollars rounded to 2 decimal places |
eTextbook and Media
Attempts: 1 of 3 used
(b)
Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 15.25.)
Overhead Rate | ||
---|---|---|
Machining | $ enter a dollar amount per hour rounded to 2 decimal places per hour | |
Machine set up | $ enter a dollar amount per hour rounded to 2 decimal places per hour |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started