Reference no: EM133128007
Question - Wellington Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs:
Setting up equipment $432,000
Other overhead $1,440,000
Setting up equipment is based on setup hours, and other overhead is based on oven hours.
Wellington produces two products, Fudge and Cookies. Information on each product is as follows:
|
Fudge
|
Cookies
|
|
Units produced
|
8,000
|
445,000
|
|
Setup hours
|
6,400
|
1,600
|
|
Oven hours
|
1,600
|
8,000
|
Required -
1. Calculate the activity rate for (a) setting up equipment and (b) other overhead.
2. How much total overhead is assigned to Fudge using ABC?
3. What is the unit overhead assigned to Fudge using ABC? Round to the nearest cent.
4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours.
5. How much total overhead is assigned to Fudge using the plantwide overhead rate?
6. What is the difference in total overhead assigned to fudge under the two methods? Do not round intermediate calculations.