Question

Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2017 Estimated Overhead Expected Use of Cost Drivers per Activity Activity Cost Pools Ordering and receiving Food processing Packaging $73,800 420,750 12,000 orders 55,000 machine hours 1,365,000 420,000 labor hours For 2017, the company had 10,000 orders and used 48,000 machine hours, and labor hours totaled 490,000 Calculate the overhead rates for cach activity. (Round answers to 2 decimal places,e.g. 12.25. Overhead Rates Ordering and receiving Food processing Packaging per order per machine hour per labor hour LINK TO TEXT What is the total overhead applied? Total overhead applied $

Answer 1

The overhead rates for each activity:
	overhead (a)	Cost driver (b)	overhead rate (a/b)
Ordering and receiving	73800	12000	6.15	per order
Food processing	420750	55000	7.65	per MH
Packaging	1365000	420000	3.25	per LH
Total overhead applied:
	Units applied	Overhead rate	Total overhead applied
Ordering	10000	6.15	61500
Food Processing	48000	7.65	367200
Packaging	490000	3.25	1592500
Total overhead applied:			2021200