Single Plantwide Rate Activity-Based Costing Final Question Single Plantwide Rat

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Single Plantwide Rate Activity-Based Costing Final Question Single Plantwide Rate WoolCorp is currently using the single plantwide factory overhead rate method, which uses a predetermined overhead rate based on an estimated allocation base such as direct labor hours or machine hours. The rate is computed as follows: Single Plantwide Factory Overhead Rate Shaded cellis have feedback. (Total Budgeted Factory Overhead)+Total Budgeted Plantwide Allocation Base) WoolCorp has been using combing machine hours as its allocation base The company would like to consider activity-based costing. In order to understand their current system better, you evaluate WoolCorp's current method of costing for raw wool and wool yarn. The production staff has compiled the following information for you on the production of 550 pounds of either raw wool or wool yarn: Factory Overhead Type Sorting Cleaning Combing Budgeted Factory Overhead $25,600 38,400 1,200 Raw Wool Wool Yarn Hours of combing machine use required 80 20 In the following table, use combing machine hours as the allocation base for assigning overhead costs to each product. When required, round your answers to the nearest dollar

Explanation / Answer

1 Single plantwide overhead rate: 652 per combing hour =(25600+38400+1200)/(80+20) 2 Allocated factory overhead cost: Raw wool 52160 =80*652 Wool yarn 13040 =20*652 3 Activity Activity rate Sorting 5.12 per sorting hour =25600/(1000+4000) Cleaning 6.4 per unit of cleaning machine hour =38400/(1800+4200) Combing 12 per unit of combing machine use =1200/(80+20) 4 Raw wool Wool yarn Sorting cost 5120 20480 Cleaning cost 11520 26880 Combing cost 960 240 Total cost 17600 47600

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