Single plantwide rate and activity$-$based costing

Whirlpool Corporation $($WHR$)$ conducted an activity$-$based costing study of its Evansville, Indiana, plant in order to identify its most profitable products. Assume that we select three representative refrigerators $($out of $333)$: one low$-,$ one medium$-,$ and one high$-$volume refrigerator. Additionally, we assume the following activity$-$base information for each of the three refrigerators:

Three Representative Refrigerators Number of Machine Hours Number of Setups Number of Sales Orders Number of Units

Refrigerator$$Low Volume $241438160$

Refrigerator$$Medium Volume $22513881,500$

Refrigerator$$High Volume $90091206,000$

Prior to conducting the study, the factory overhead allocation was based on a single machine hour rate. The machine hour rate was $$200$ per hour. After conducting the activity$-$based costing study, assume that three activities were used to allocate the factory overhead. The new activity rate information is assumed to be as follows:

Line Item Description Machining Activity Setup Activity Sales Order

Processing Activity

Activity rate $$160$ $$240$ $$55$

a$.$ Complete the following table, using the single machine hour rate to determine the per$-$unit factory overhead for each refrigerator $($Column A$)$ and the three activity$-$based rates to determine the activity$-$based factory overhead per unit $($Column B$).$ Finally, compute the percent change in per$-$unit allocation from the single to activity$-$based rate methods $($Column C$).$

If required, round all per unit answers to the nearest cent. Round percents to one decimal place. For column C$,$ use the minus sign to indicate a negative or decrease.

Product Volume Class Column A

Single Rate

Overhead Allocation

per Unit Column B

ABC

Overhead Allocation

per Unit Column C

Percent Change in

Allocation

Low $fill in the blank $1$

$fill in the blank $2$

fill in the blank $3$

$\%$

Medium $fill in the blank $4$

$fill in the blank $5$

fill in the blank $6$

$\%$

High $fill in the blank $7$

$fill in the blank $8$

fill in the blank $9$

$\%$