Jones Manufacturing Company makes two products. The company s budget includes $430,100 of overhead. In the past, the company allocated overhead based on estimated total direct labor hours of 18,700. Jones recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: processed purchase orders, machine setups, and good shipped. The following is a summary of company information: Estimated Cost Estimated Activities Orders processed $71,260 5,090 orders Machine setups 12,000 480 machine hours Shipping 24,037 55,900 shipments $107,297 Calculate the company s overhead rate based on total direct hours.

Jones Manufacturing Company makes two products. The company s budget includes $430,100 of overhead. In the past, the company allocated overhead based on estimated total direct labor hours of 18,700. Jones recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: processed purchase orders, machine setups, and good shipped. The following is a summary of company information: Estimated Cost Estimated Activities Orders processed $71,260 5,090 orders Machine setups 12,000 480 machine hours Shipping 24,037 55,900 shipments $107,297 Calculate the company s overhead rate based on total direct hours.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 3CE: Lansing. Inc., provided the following data for its two producing departments: Machine hours are used...

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