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What is the unit overhead assigned to fudge using abc

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Reference no: EM132516184

Wellington Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs:

Setting up equipment $600,000

Other overheard $3,360,000

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                12,000                      3,000

Oven hours                   3,000                    21,000

Required:

Round your answers to the nearest whole dollar, unless otherwise directed.

Question 1. Calculate the activity rate for (a) setting up equipment and (b) other overhead.

Question 2. How much total overhead is assigned to Fudge using ABC?

Question 3. What is the unit overhead assigned to Fudge using ABC? Round to the nearest cent.

Question 4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours. Round to the nearest cent.

Question 5. How much total overhead is assigned to Fudge using the plantwide overhead rate?

Question 6a. The difference in the total overhead assigned to Fudge is different under the ABC system and non-ABC system because?

Question 6b. What is the difference in total overhead assigned to fudge under the two methods?

Reference no: EM132516184

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