Weasley Corporation manufactures two models: Nimbus and Firebolt Production of the Nimbus Model is 100,000 units and production of the Firebolt model is 10,000 units.

ANSWER A-E:

A. If Weasley uses activity based costing, what TOTAL overhead cost will be assigned to the Nimbus product line?

B. If Weasley uses activity based costing, what TOTAL overhead cost will be assigned to the Firebolt product line?

C. If Weasley uses activity based costing, what is the overhead cost PER UNIT of the Nimbus product line?

D. If Weasley uses activity based costing, what is the overhead cost PER UNIT of the Firebolt product line?

E. For Weasley Company, is the use of a single plant wide overhead rate leading to cost distortion? If so, why does activity based costing eliminate the cost distortion?

Budgeted Overhead Receiving Assembling Machining Testing Total Budgeted Overhead Costs S 2,720,000 4,324,000 7,304,000 252,000 S 14,600,000 Direct Labor Hours: Nimbus Firebolt 800,000 200,000 1,000,000 Total Direct Labor Hours Pounds Nimbus Firebolt 300,000 100,000 400,000 Total Pounds Number of Parts Nimbus Firebolt 700,000 240,000 940,000 Total Number of Parts Machine Hours Nimbus Firebolt 600,000 280,000 880,000 Total Number of Parts Number of Tests Nimbus Firebolt 200 100 300 Total Tests