Reference no: EM132099921

Question - The accountant for Scenic Photographic Supply Company has established the following overhead cost pools and activity drivers.

Overhead Cost Pool	Budgeted Overhead Cost	Activity Driver
Machine set-ups	$100,000	Number of setups
Material handling	$50,000	Weight of raw material
Hazardous waste control	$25,000	Weight of hazardous chemicals used
Quality control inspection	$37,500	Number of inspections
Other overhead costs	$100,000	Machine hours
Total	$312,500
Overhead Cost Pool	Budgeted Level for Activity Driver	Overhead Rate
Machine set-ups	100	$1,000 per setup
Material handling	50,000 kilos	$1 per kilo
Hazardous waste control	10,000 kilos	$2.50 per kilo
Quality control inspection	1,000	$37.50 per inspection
Other overhead costs	20,000	$5 per machine hour

An order for 1,000 boxes of film development chemicals has the following production requirements:

Machine set-ups	4 Set-ups
Raw material	l0,000 kilos
Hazardous materials	2,000 kilos
Inspections	10 inspections
Machine hours	500 machine hours

Required

1. Calculate the total overhead that should be assigned to the development chemical order.

2. What is the overhead cost per box of chemicals?

3. Suppose Scenic Photographic Supply Company was to use a single, predetermined overhead rate based on machine hours. Calculate the rate per hour.

4. Using the single plantwide rate, what is the total overhead assigned and the overhead cost per box of chemicals?

5. Discuss the merits of an activity-based overhead costing system.