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Single Plantwide Rate and Activity-Based Costing Whirlpool Corporation conducted an activity-based costing study of its Evansville, Indiana, plant in order to identify its most profitable

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Single Plantwide Rate and Activity-Based Costing Whirlpool Corporation 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 Number of Number of Number of Number of Refrigerators Machine Hours Setups Sales Orders Units Refrigerator-Low Volume 40 20 60 200 Refrigerator Medium Volume 340 19 1,700 Refrigerator-High Volume 1,010 13 200 5,050 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: Sales Order Machining Activity Setup Activity Processing Activity Activity rate $190 $300 $70 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. Column Column B Column C Single Rate Overhead Allocation ABC Overhead Allocation Percent Change in Column A Column B Column C Single Rate Overhead Allocation Per Unit ABC Overhead Allocation Per Unit Percent Change in Allocation Product Volume Class Low 40 200 X 1,010 X % Medium 40 % 40 % Single Plantwide Factory Overhead Rate Spotted Cow Dairy Company manufactures three products whole milk, skim milk, and cream-in two production departments, Blending and Packing. The factory overhead for Spotted Cow Dairy is $273,000 The three products consume both machine hours and direct labor hours in the two production departments as follows: Direct Labor Hours Machine Hours Blending Department Whole milk 260 700 640 280 220 Cream 250 760 1,590

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