Cost Pools Machine Setup Inspection Estimated Overhead $741,600 $302,400 Cost Driver Number of Setups Number of Inspections Expected Use of Drivers 10,000 setups 12,600 inspections Usage by Drills 5,600 6,800 Answer the following questions based on the data above: 1. Compute the single traditional overhead rate. 2. How much overhead is applied to Drills using the single overhead rate? 3. How much overhead is applied to Saws using the single overhead rate? 4. Compute the overhead rates for the Machine Setup cost pool using ABC. 5. Compute the overhead rates for the Inspection cost pool using ABC. 6. How much overheads is applied to Drills using ABC rates? 7. How much overhead is applied to Saws using ABC rates? Usage by Saws 4,400 5,800
Cost Pools Machine Setup Inspection Estimated Overhead $741,600 $302,400 Cost Driver Number of Setups Number of Inspections Expected Use of Drivers 10,000 setups 12,600 inspections Usage by Drills 5,600 6,800 Answer the following questions based on the data above: 1. Compute the single traditional overhead rate. 2. How much overhead is applied to Drills using the single overhead rate? 3. How much overhead is applied to Saws using the single overhead rate? 4. Compute the overhead rates for the Machine Setup cost pool using ABC. 5. Compute the overhead rates for the Inspection cost pool using ABC. 6. How much overheads is applied to Drills using ABC rates? 7. How much overhead is applied to Saws using ABC rates? Usage by Saws 4,400 5,800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
A company manufactures two products, Drills and Saws. Their total estimated
the year is $1,044,000 and expected labor hours are 72,600 hours; 32,600 for drills and 40,000
for saws. The company is considering using ABC for applying overhead to their products, instead of a
single traditional overhead rate. They have broken down their overhead costs into the following
cost pools and cost drivers.
Transcribed Image Text:### Cost Allocation Data
#### Table: Overhead Cost Pools and Drivers
| Cost Pools | Estimated Overhead | Cost Driver | Expected Use of Drivers | Usage by Drills | Usage by Saws |
|-----------------|--------------------|-------------------------|-------------------------|-----------------|---------------|
| Machine Setup | $741,600 | Number of Setups | 10,000 setups | 5,600 | 4,400 |
| Inspection | $302,400 | Number of Inspections | 12,600 inspections | 6,800 | 5,800 |
#### Questions to Answer:
1. Compute the single traditional overhead rate.
2. How much overhead is applied to Drills using the single overhead rate?
3. How much overhead is applied to Saws using the single overhead rate?
4. Compute the overhead rates for the Machine Setup cost pool using ABC (Activity-Based Costing).
5. Compute the overhead rates for the Inspection cost pool using ABC.
6. How much overhead is applied to Drills using ABC rates?
7. How much overhead is applied to Saws using ABC rates?
### Explanation:
This table provides data for allocating overhead costs to different products, specifically Drills and Saws. It includes estimated overhead costs and the corresponding cost drivers, which are used to assign overhead costs based on actual usage.
The questions guide you through calculating traditional overhead rates and using Activity-Based Costing (ABC) to determine more accurate overhead allocations.
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