Calculate the pre-determined overhead rate

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Question - Health Food Company produces two exclusive products: food package to lose weight and food package to stabilize weight. The company has the following actual and budgeted data:

Budgeted overhead $360,000

Expected activity (DLH) 100,000 Actual activity (DLH) 100,000

Actual overhead $380,000

 

Food package to lose weight

Food package to stabilize weight

Units produced

10,000

100,000

Prime costs

78,000

738,000

Direct labor hours

10,000

90,000

Required -

1. Calculate the pre-determined overhead rate?

2. What is your opinion if Health food company use Activity based costing (ABC)? Is it possible? Please explain by providing illustrations of the activities, cost drivers, and calculations!

Reference no: EM133055255

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