Chapter C, Problem 2QS

Computing plantwide overhead rates P1
Chan Company identified the following activities, costs, and activity' drivers for this year. The company manufactures two types of go-karts: fast and standard.
ActivityExpected costsExpected Activity

Handling materials............._____ $625,000 100,000 parts
Inspecting product............._____ 900,000 1,500 batches
Processing purchase orders......____. 105,000 700 orders
Paying suppliers..............._____ 175,000 500 invoices
Insuring the factory............._____ 300,000 40,000 square feet
Designing packaging..........._____ 75,000 2 models

1. Compute a single plantwide overhead rate assuming that the company assigns overhead based on 100,000 budgeted direct labor hours.
2. In January of this year, the fast model required 2,500 direct labor hours and the standard model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.