Tri-bikes manufactures two different levels of bicycles: the Standard and the Extreme. The total overhead of $300,000 has traditionally been allocated by direct labor hours, with 150,000 hours for the Standard and 50,000 hours for the Extreme. After analyzing and assigning costs to two cost pools, it was determined that machine hours is estimated to have $200,000 of overhead, with 4,000 hours used on the Standard product and 1,000 hours used on the Extreme product. It was also estimated that the setup cost pool would have $100,000 of overhead, with 1,000 hours for the Standard and 1,500 hours for the Extreme. What is the overhead rate per product, under traditional and under ABC costing?
Traditional: Predetermined Overhead Rate
Total Overhead for the Standard Product under the traditional method
Total Overhead for the Extreme Product under the traditional method
Total Overhead under the traditional method
ABC Machine Pool: Predetermined Overhead Rate
ABC Set-up Pool: Predetermined Overhead Rate
Machine Pool Overhead for the Standard Product under ABC
Machine Pool Overhead for the Extreme Product under ABC
Set-up Pool Overhead for the Standard Product under ABC
Set-up Pool Overhead for the Extreme Product under ABC
Total Overhead under the ABC method