Question

Exercise 17-3 Computing plantwide overhead rates LO P1 Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go-karts: Deluxe and Basic Activity Handling materials Inspecting product Processing purchase orders Paying suppliers Insuring the factory Designing packaging Expected Costs $ 625,000 900,000 105,000 175,000 300,000 75,000 Expected Activity 100,000 parts 1,500 batches 700 orders 500 invoices 40,000 square feet 2 models Required: 1. Compute a single plantwide overhead rate for the year, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours. 2. In January of this year, the Deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute a single plantwide overhead rate for the year, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours. Required 1 Required 2 >

Answer 1

Handling materials	625000
Inspecting product	900000
Processing purchases orders	105000
Paying suppliers	175000
Insuring the factory	300000
Designing packaging	75000
Estimated overhead costs	2180000
1
Estimated overhead costs	2180000	17.44	per direct labor hour
Estimated direct labor hours	125000
2
	Total DL hours required	Plantwide OH rate	Total Overhead cost
Deluxe model	2500	17.44	43600
Basic model	6000	17.44	104640