The Oscuro Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs:

Setting Up Equipment $108,000

Other Overhead$360,000

Setting up equipment is based on set up hours, and other overhead is based on oven hours. Oscuro produces two products, Fudge and Cookies. Information on each product is as follows:

Fudge Cookies

Units produced 2,000 10,000

Set Up hours1,600400

Oven hours 400 2,000

1. Calculagte the activity rate for (a) setting up equipment, (b) other overhead

2. How much total overhead is assigned to Fudge using ABC?

3. What is the unit overhead assigned to Fudge using ABC?

4. Now, ignoring the ABC resutls, claculate the plantwide ovehead rate, based on oven hours

5. How much total overhead is assigned to Fudge using the plantwide overhead rate?

6. Explain why the total overhead assigned to Fudge is different under ABC system (i.e. using the acgtivity rates) than under the non-ABC system (i.e. using the plantwide rate)