Activity Rates
Patten Company uses activity-based costing (ABC). Patten manufactures toy cars using two activities: plastic injection molding and decal application. Patten's 20X1 total budgeted overhead costs for these two activities are $492,000 (90% for injection molding and 10% for decal application). Molding overhead costs are driven by the number of pounds of plastic that are molded together. Decal application overhead costs are driven by the number of decals applied to toys. The budgeted activity data for 20X1 are as follows:
Line Item DescriptionNumerical DataPounds of plastic molded1,940,000Number of decals applied197,000
Required:
1. Calculate the activity rate for the plastic injection molding activity. Round your answer to the nearest cent.
fill in the blank 1 of 1$ per pound molded
2. Calculate the activity rate for the decal application activity. Round your answer to the nearest cent.
fill in the blank 1 of 1$ per decal applied
Comparing ABC and Plantwide Overhead Cost Assignments
Castle Dale Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs:
Line Item DescriptionAmountSetting up equipment$660,000Other overheard$2,376,000
Setting up equipment is based on setup hours, and other overhead is based on oven hours.
Castle Dale produces two products, Fudge and Cookies. Information on each product is as follows:
Line Item DescriptionFudgeCookiesBatches produced16,000890,000Setup hours12,0003,000Oven hours2,20015,400
Required:
1. Calculate the activity rate for (a) setting up equipment and (b) other overhead.
Line Item DescriptionActivity ratea. Setting up equipment$fill in the blank 1 per setup hourb. Other overhead$fill in the blank 2 per oven hour
2. How much total overhead is assigned to Fudge using ABC?
fill in the blank 1 of 1$
3. What is the unit overhead assigned to Fudge using ABC? Round to the nearest cent.
fill in the blank 1 of 1$per unit
4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours. Round to the nearest cent.
fill in the blank 1 of 1$ per oven hour
5. How much total overhead is assigned to Fudge using the plantwide overhead rate?
fill in the blank 1 of 1$
6a. The difference in the total overhead assigned to Fudge is different under the ABC system and non–ABC system because
different treatment of setup costs.difference in the Batches produced.difference in the sale prices of the products.different oven temperatures required for baking fudge and cookies..
6b. What is the difference in total overhead assigned to fudge under the two methods?
fill in the blank 1 of 1$