Brief Exercise 17-7 (Part Level Submission) Activity Cost Pools Estimated Overhe

Question

Brief Exercise 17-7 (Part Level Submission)

Activity Cost Pools

Estimated
Overhead

Expected Use of
Cost Drivers per Activity

(a)

Overhead Rates

Open Show Work

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Brief Exercise 17-7 (Part Level Submission)

Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2017.

Activity Cost Pools

Estimated
Overhead

Expected Use of
Cost Drivers per Activity

Ordering and receiving $94,720 12,800 orders Food processing 492,000 60,000 machine hours Packaging 1,695,450 445,000 labor hours
For 2017, the company had 11,800 orders and used 51,100 machine hours, and labor hours totaled 497,000.

Explanation / Answer

The correct answer is :

Note:

Overhead Rates Ordering and receiving $ 7.40 per order Food processing $ 8.20 per machine hour Packaging $ 3.81 per labor hour

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