Question

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 2020. Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers per Activity Ordering and receiving $89,886 14,200 orders Food processing 474,925 60,500 machine hours Packaging 1,574,540 421,000 labor hours For 2020, the company had 11,400 orders and used 50,300 machine hours, and labor hours totaled 506,000. Calculate the overhead rates for each activity. (Round answers to 2 decimal places, e.g. 12.25.) Overhead Rates Ordering and receiving $ per order Food processing $ per machine hour Packaging $ per labor hour What is the total overhead applied? Total overhead applied $ Click if you would like to Show Work for this question

Answer 1

Answer:

Overhead Rates

Ordering and receiving $ 6.33 per order

Food processing $   7.85 per machine hour

Packaging $  3.73  per labor hour

Total overhead applied $ 2354055

Explanation:

              Activity              Estimated                          Estimated Use of

             Cost Pools        Overhead                   Cost Drivers per Activity

Ordering and receiving $89,886                    14,200 orders

Food processing          474,925                    60,500 machine hours

Packaging                   1,574,540                   421,000 labor hours

For 2020, the company had 11,400 orders and used 50,300 machine hours, and labor hours totaled 506,000

Overhead Rates

Ordering and receiving $89,886/14,200  order = $ 6.33 per order

Food processing $   474,925 / 60,500 machine hour = $7.85 per machine hour

Packaging $  1,574,540/ 421,000  labor hour= $ 3.73  per labor hour

Total overhead applied $ 2354055

Ordering and receiving= 11,400* $ 6.33=$ 71820

Food processing  =50,300 *$7.85= $ 394855

Packaging = 506,000* 3.73=  $ 1887830