Question

Help I System Announcements (1 Unread) counting, 2e PRINTER VERSION BACK NEXT Brief Exercise 18-7 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 $95,942 15,400 orders 525,625 62,500 machine hours 448,000 labor hours 1,886,080 For 2017, the company had 10,800 orders and used 49,700 machine hours, and labor hours totaled 510,000. Calculate the overhead rates for each activity. (Round answers to 2 decimal places, e.g. 12.25.) Overhead Rates Ordering and receiving per order $ per machine hour Food processing $ per labor hour Packaging What is the total overhead applied? Total overhead applied e A 15.393 JUL

Answer 1

Ans. 1	Overhead rates = Estimated overhead / Expected Cost drivers
	Activity cost pool	Estimated overhead (a)	Expected cost drivers (b)		Overhead rate (a / b)
	Ordering and receiving	95942	15400	orders	$6.23	per order
	Food processing	525625	62500	machine hours	$8.41	per machine hour
	Packaging	1886080	448000	labor hours	$4.21	per labor hour
Ans. 2	Total Overhead Applied   =   Actual activity * Overhead rate per activity
	Activity cost pool	Actual activity (a)		Overhead rate (b)		Total   (a*b)
	Ordering and receiving	10800	orders	$6.23	per order	$67,284
	Food processing	49700	machine hours	$8.41	per machine hour	$417,977
	Packaging	510000	labor hours	$4.21	per labor hour	$2,147,100
	Total Overhead Applied					$2,632,361