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 Description Amount Setting up equipment $336,000 Other overheard $5,376,000 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 Description Fudge Cookies Batches produced 16,000 890,000 Setup hours 5,600 1,400 Oven hours 4,200 29,400 Required: 1. Calculate the activity rate for (a) setting up equipment and (b) other overhead. Line Item Description Activity rate a. Setting up equipment $fill in the blank 1 per setup hour b. 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 . 6b. What is the difference in total overhead assigned to fudge under the two methods?fill in the blank 1 of 1$ Check My Work2 more Check My Work uses remaining.

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 5CE: Roberts Company produces two weed eaters: basic and advanced. The company has four activities:...

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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 Description Amount

Setting up equipment $336,000

Other overheard $5,376,000

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 Description Fudge Cookies

Batches produced 16,000 890,000

Setup hours 5,600 1,400

Oven hours 4,200 29,400

Required:

1. Calculate the activity rate for (a) setting up equipment and (b) other overhead.

Line Item Description Activity rate

a. Setting up equipment $fill in the blank 1 per setup hour

b. 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

.

6b. What is the difference in total overhead assigned to fudge under the two methods?

fill in the blank 1 of 1$