Mahdi Corporation currently uses a simple costing system where overhead is allocated on the basis of assembly hours. A recent study has provided the following data which it intends to use to introduce an activity-based costing system: 

Activity Cost Pool               Total activity Cost              Cost driver                      Total cost driver 

Designing products              $1,300,000                    Product design hours              7,000 

Setting up batches                 $33,300                          Batch set-ups                             700 

Assembling products             $126,000                        Assembly hours                          6,000

Required: 

Compute the predetermined overhead rate using the simple costing system.

Answer rating: 100% (QA)

Steps Step 1 of 2 Predetermine overhead rate is that overhead rate which is depend on budgeted over... View the full answer