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(b) Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 15.25.) Your answer is correct. (c) Machining Machine set up eTextbook and Media Traditional ABC * Your answer is incorrect. tA tA LA LA Determine the difference in allocation between the two approaches. Difference $ Overhead Rate 69.12 per hour Family Model 184.32 per hour 138240 36864 +A tA EA Deluxe Model 138240 147456 Attempts: 1 of 3 used

(b) Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 15.25.) Your answer is correct. (c) Machining Machine set up eTextbook and Media Traditional ABC * Your answer is incorrect. tA tA LA LA Determine the difference in allocation between the two approaches. Difference $ Overhead Rate 69.12 per hour Family Model 184.32 per hour 138240 36864 +A tA EA Deluxe Model 138240 147456 Attempts: 1 of 3 used

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Determine the difference in allocation between the two approaches

### (b) <div style="background-color: #d8ffd8; padding: 10px; border-radius: 5px;"> <img src="checkmark_icon.png" alt="Checkmark" style="vertical-align: middle;"> Your answer is correct. </div> Compute the overhead rates using the activity-based costing approach. *(Round answers to 2 decimal places, e.g., 15.25.)* #### Overhead Rate <table border="1" style="border-collapse: collapse; width: 50%;"> <tr> <th>Machining</th> <td style="text-align: right;">$ 69.12</td> <td>per hour</td> </tr> <tr> <th>Machine set up</th> <td style="text-align: right;">$ 184.32</td> <td>per hour</td> </tr> </table> #### eTextbook and Media Attempts: 1 of 3 used ### (c) <div style="background-color: #ffcccc; padding: 10px; border-radius: 5px;"> <img src="cross_icon.png" alt="Cross" style="vertical-align: middle;"> Your answer is incorrect. </div> Determine the difference in allocation between the two approaches. <table border="1" style="border-collapse: collapse; width: 100%;"> <thead> <tr> <th></th> <th colspan="2" style="text-align: center;">Family Model</th> <th colspan="2" style="text-align: center;">Deluxe Model</th> </tr> </thead> <tbody> <tr> <td>Traditional</td> <td style="text-align: right;">$</td> <td style="border: 1px solid red; text-align: right;">138240</td> <td style="text-align: right;">$</td> <td style="border: 1px solid red; text-align: right;">138240</td> </tr> <tr> <td>ABC</td> <td style="text-align: right;">$</td> <td style="border: 1px solid red; text-align: right
Transcribed Image Text:### (b) <div style="background-color: #d8ffd8; padding: 10px; border-radius: 5px;"> <img src="checkmark_icon.png" alt="Checkmark" style="vertical-align: middle;"> Your answer is correct. </div> Compute the overhead rates using the activity-based costing approach. *(Round answers to 2 decimal places, e.g., 15.25.)* #### Overhead Rate <table border="1" style="border-collapse: collapse; width: 50%;"> <tr> <th>Machining</th> <td style="text-align: right;">$ 69.12</td> <td>per hour</td> </tr> <tr> <th>Machine set up</th> <td style="text-align: right;">$ 184.32</td> <td>per hour</td> </tr> </table> #### eTextbook and Media Attempts: 1 of 3 used ### (c) <div style="background-color: #ffcccc; padding: 10px; border-radius: 5px;"> <img src="cross_icon.png" alt="Cross" style="vertical-align: middle;"> Your answer is incorrect. </div> Determine the difference in allocation between the two approaches. <table border="1" style="border-collapse: collapse; width: 100%;"> <thead> <tr> <th></th> <th colspan="2" style="text-align: center;">Family Model</th> <th colspan="2" style="text-align: center;">Deluxe Model</th> </tr> </thead> <tbody> <tr> <td>Traditional</td> <td style="text-align: right;">$</td> <td style="border: 1px solid red; text-align: right;">138240</td> <td style="text-align: right;">$</td> <td style="border: 1px solid red; text-align: right;">138240</td> </tr> <tr> <td>ABC</td> <td style="text-align: right;">$</td> <td style="border: 1px solid red; text-align: right
### Overhead Rate Calculation: Plantwide Approach **Bonita, Inc.** produces two types of gas grills: a family model and a deluxe model. Bonita’s controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. ### Company Operations Information | | **Family Model** | **Deluxe Model** | |------------------------|------------------|------------------| | **Direct labor costs** | $76,800 | $153,600 | | **Machine hours** | 2,000 | 2,000 | | **Setup hours** | 200 | 800 | Total estimated overhead costs are $460,800. Overhead cost allocated to the machining activity cost pool is $276,480 and $184,320 is allocated to the machine setup activity cost pool. #### (a) **Compute the overhead rate using the traditional (plantwide) approach.** **Solution:** The total estimated overhead costs are $460,800 and the combined direct labor costs for both models are $76,800 + $153,600 = $230,400. Using the plantwide approach, we calculate the overhead rate as: \[ \text{Overhead rate} = \frac{\text{Total estimated overhead costs}}{\text{Total direct labor costs}} \] \[ \text{Overhead rate} = \frac{460,800}{230,400} = 2 \] Therefore, the overhead rate is **$2**. ### Graphs and Diagrams: - There are no graphs or diagrams in the provided text. **Note:** Please ensure to round answers to 2 decimal places as specified in the instructions (e.g., 15.25).
Transcribed Image Text:### Overhead Rate Calculation: Plantwide Approach **Bonita, Inc.** produces two types of gas grills: a family model and a deluxe model. Bonita’s controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. ### Company Operations Information | | **Family Model** | **Deluxe Model** | |------------------------|------------------|------------------| | **Direct labor costs** | $76,800 | $153,600 | | **Machine hours** | 2,000 | 2,000 | | **Setup hours** | 200 | 800 | Total estimated overhead costs are $460,800. Overhead cost allocated to the machining activity cost pool is $276,480 and $184,320 is allocated to the machine setup activity cost pool. #### (a) **Compute the overhead rate using the traditional (plantwide) approach.** **Solution:** The total estimated overhead costs are $460,800 and the combined direct labor costs for both models are $76,800 + $153,600 = $230,400. Using the plantwide approach, we calculate the overhead rate as: \[ \text{Overhead rate} = \frac{\text{Total estimated overhead costs}}{\text{Total direct labor costs}} \] \[ \text{Overhead rate} = \frac{460,800}{230,400} = 2 \] Therefore, the overhead rate is **$2**. ### Graphs and Diagrams: - There are no graphs or diagrams in the provided text. **Note:** Please ensure to round answers to 2 decimal places as specified in the instructions (e.g., 15.25).
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