Question

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 References 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. Estimated corondoosts Acha Direct labor costs Required 2 >

Answer 1

1) overhead rate per direct labour hour = total overhead cost / total direct labour hours

= 2,180,000 / 125,000

= 17.44 per hour

2)

model	direct labour hour	overhead rate	cost allocated
Delux	2,500	17.44	43,600
Basic	6,000	17.44	104,640