Question
) Villasenor Company manufactures two products (M and N). The overhead costs ($82,000) have been divided into four cost pools that use the following activity
) Villasenor Company manufactures two products (M and N). The overhead costs ($82,000) have been divided into four cost pools that use the following activity drivers:
Number Number Number
of of of Labor Labor
Product Orders Setups Transactions Hours
M 30 40 60 2,000
N 50 60 90 500
Cost per pool $24,000 $19,000 $9,000 $30,000
Additionally, Villesenor incurred the following amounts of direct materials and direct labor on products M and N:
M N Total
Direct materials $45,000 $40,000 $85,000
Direct labor 35,000 25,000 60,000
Total $80,000 $65,000 $145,000
Required:
a. Determine the single plantwide factory overhead rate using direct labor hours as the allocation base.
b. Determine the total overhead costs assigned individually to products M and N using the single plantwide factory overhead rate determined in part (a) above.
c. Determine the activity rate for each activity.
d. Determine the total activity (overhead) costs assigned to products M and N using the activity rates found in part c.
e. Determine the total product costs assigned to products M and N using the activity rates found in part c.
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