Calculate predetermined oh rate

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Reference no: EM131194621

Question:

Claire Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products.

Activity Pool	Department Costs		Cost Driver
Binding		$231,296	Number of units
Printing		812,864	Machine hours
Product design		199,680	Change orders
General		644,384	None
Total overhead costs		$1,888,224

Other information is as follows:

	Tablets	Books
Units	62,700	20,400
Direct materials cost per unit	$3.02	$10.31
Direct labor cost per unit	$4.17	$7.97
Direct labor hours	25,100	16,500
Machine hours	126,000	122,000
Change orders	1,200	3,000

1. Calculate predetermined OH rate.

2. Determine the unit product cost for Tablets and Books using the traditional costing system.

3. Calculate ABC rates.

4. Determine the unit product cost for Tablets and Books using the activity-based costing system.

5. Show that General cost is the difference between the total overhead costs allocated to products under the traditional system and the total cost allocated to products under the activity-based costing system.

Reference no: EM131194621

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