Question

QUESTION 19 Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year Activity Cost Cost Driver Pool Ordering and Orders Receiving Machine Setup Setups Machining Assembly Inspection Cost Driver Activity Est. Overhead $120,000 500 orders 450 setups 1,500,000 125,000 MH 1,200,000 1,000,000 parts 500 inspections 297,000 Machine hours Parts |Inspections 300,000 If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is $1.20 per direct labor hour $240 per order. S0.12 per part $6,834 per order. QUESTION 20 The first step in activity-based costing is to assign overhead costs to products, using overhead rates determined for each cost pool. compute the activity-based overhead rate per cost driver identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools. identify the cost driver that has a strong correlation to the activity cost pool.

Answer 1

Que-19:

=Ordering and receiving cost pool/cost driver

=120000/500

=240 per order

Que 20:

c) identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.