Penelope's Paperbooks is considering switching from a departmental manufacturing overhead rate to activity based costing for...

 

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Penelope's Paperbooks is considering switching from a departmental manufacturing overhead rate to activity based costing for manufacturing overhead. Of the $2,500,000 of manufacturing overhead (MOH): Penelope's determined that $1,650,000 is related to the Assembly Dept. and $850,000 is related to the Packaging Dept. Penelope's will use machine hours (MH) to allocate Assembly Dept. costs o Basic books 5,000 MH in Assembly Deluxe books 20,000 MH in Assembly o Total 25,000 MH in Assembly . . • Penelope's uses direct labor costs/dollars (DL$) to allocate Packaging Dept. costs. Basic books $990,000 DL$ in Packaging Ö Deluxe books $360,000 DL$ in Packaging o Total $1,350,000 DL$ in Packaging Activity Binding Machine set- ups Handling materials Inspecting & packing Cost $1,080,000 Machine hrs. 396,000 144,000 Cost Driver 414,000 Basic 6,000 Set-up hrs. 40 DLH Production runs 8 60,000 Deluxe 30,000 400 40 22,800 Total 36,000 440 48 82,800 Handling materials Inspecting & packing Shipping 144,000 414,000 396,000 Production runs 8 DLH 40 60,000 22,800 # shipments 100 200 48 82,800 300 Using the above information for Penelope's Paperbooks: . Using the above information for Penelope's Paperbooks: Compute the overhead rate for the Binding activity? (Round to the nearest 2 decimal places if applicable) Penelope's Paperbooks is considering switching from a departmental manufacturing overhead rate to activity based costing for manufacturing overhead. Of the $2,500,000 of manufacturing overhead (MOH): Penelope's determined that $1,650,000 is related to the Assembly Dept. and $850,000 is related to the Packaging Dept. Penelope's will use machine hours (MH) to allocate Assembly Dept. costs o Basic books 5,000 MH in Assembly Deluxe books 20,000 MH in Assembly o Total 25,000 MH in Assembly . . • Penelope's uses direct labor costs/dollars (DL$) to allocate Packaging Dept. costs. Basic books $990,000 DL$ in Packaging Ö Deluxe books $360,000 DL$ in Packaging o Total $1,350,000 DL$ in Packaging Activity Binding Machine set- ups Handling materials Inspecting & packing Cost $1,080,000 Machine hrs. 396,000 144,000 Cost Driver 414,000 Basic 6,000 Set-up hrs. 40 DLH Production runs 8 60,000 Deluxe 30,000 400 40 22,800 Total 36,000 440 48 82,800 Handling materials Inspecting & packing Shipping 144,000 414,000 396,000 Production runs 8 DLH 40 60,000 22,800 # shipments 100 200 48 82,800 300 Using the above information for Penelope's Paperbooks: . Using the above information for Penelope's Paperbooks: Compute the overhead rate for the Binding activity? (Round to the nearest 2 decimal places if applicable)

Answer rating: 100% (QA)

ANSWER To compute the overhead rate for the Binding activity ... View the full answer