Question

Exercise 17-1 Computing plantwide overhead rates LO P1 Xie Company identified the following activities, costs, and activity drivers for 2017. 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, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours. 2. In January 2017, 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, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours. Required 1 Required 2 >

Answer 1

1. Single plantwide overhead rate

Estimated overhead costs	$2,180,000	$17.44	per direct labor hours
Budgeted direct labor hours	125,000

2. Assigning overhead costs using single plantwide overhead costs

	Total DL hours required	Plantwide OH Rate	Total Overhead Cost
Deluxe model	2,500	$17.44	$46,600
Basic model	6,000	$17.44	$104,640