Question
The controller for Crombie Inc. has established the following activity cost pools and cost drivers. Budgeted Budgeted Overhead Level for Activity Cost Pool Cost Cost
The controller for Crombie Inc. has established the following activity cost pools and cost drivers.
Budgeted Budgeted
Overhead Level for
Activity Cost Pool Cost Cost Driver Cost Driver
Machine setups $350,000 Number of setups 225
Material handling 125,000 Weight of material 25,000 kilograms
Waste control 75,000 Weight of chemicals 7,500 kilograms
Quality control 110,000 Number of inspections 400
Other overhead costs 400,000 Machine hours 30,000
Each order must be a minimum of 1,000 boxes of film chemicals.
The production requirements for each minimum order are as follows:
Machine setups 10 setups
Material handling 2,500 kilograms
Waste Control 300 kilograms
Quality Control 4 inspections
Other Overhead Costs 750 machine hours
Required:
1 Calculate the overhead that should be assigned to each minimum order of film chemicals using the above data.
2 Calculate the overhead that should be assigned to each minimum order of film chemicals if Crombie decides to use a single predetermined overhead rate based on machine hours.
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