Question

Sheridan Machining makes three products. The company’s annual budget includes $1,104,300 of overhead. In the past, the company allocated overhead based on expected capacity of 40,000direct labor hours. The company recently implemented an activity-based costing system and has determined that overhead costs can be broken into four overhead pools: order processing, setups, milling, and shipping. The following is a summary of company information:
Expected CostExpected ActivitiesOrder processing $283,900 17,000 orders Setups168,000 4,200 setups Milling 377,400 20,400 machine hours Shipping275,000 25,000 shipments $1,104,300

(b)	Calculate the company’s overhead rates using the activity-based costing pools. (Round answers to 2 decimal places, e.g. 15.25.)
	Order processing $Enter a dollar amount per order per order Setups $Enter a dollar amount per setup per setup Milling $Enter a dollar amount per machine hour per machine hour Shipping $Enter a dollar amount per shipment per shipment

(a)	Calculate the company’s overhead rate based on direct labor hours. (Round answer to 2 decimal places, e.g. 15.25.)
	Overhead rate $Enter the overhead rate in dollars per direct labor hour  / DLH

Answer 1