Tidwell Industries has the following overhead costs and cost
drivers. Direct labor hours are estimated at 100000 for the
year.
Activity Cost Pool | Cost Driver | Est. Overhead | Cost Driver Activity | |
Ordering and Receiving | Orders | $ 110000 | 500 orders | |
Machine Setup | Setups | 288000 | 450 setups | |
Machining | Machine hours | 1475000 | 125000 MH | |
Assembly | Parts | 1180000 | 1000000 parts | |
Inspection | Inspections | 290000 | 500 inspections |
If overhead is applied using activity-based costing, the overhead
application rate for ordering and receiving is
$220 per order.
$6686 per order.
$1.10 per direct labor hour.
$0.11 per part.
Estimated overheads for Ordering and Receiving = $110,000
Estimated number of orders = 500
Overhead application rate for ordering and receiving = Estimated overheads for Ordering and Receiving/Estimated number of orders
= 110,000/500
= $220 per order
If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is $220 per order.
First option is correct.
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Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at...
Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100000 for the year. Activity Cost Pool Cost Driver Est. Overhead Cost Driver Activity Ordering and Receiving Orders $ 95000 500 orders Machine Setup Setups 274500 450 setups Machining Machine hours 1437500 125000 MH Assembly Parts 1150000 1000000 parts Inspection Inspections 275000 500 inspections If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is $0.10 per part. $6464 per...
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