A company manufactures two products, Drills and Saws. Their total estimated overhead cost for the year...

 

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A company manufactures two products, Drills and Saws. Their total estimated overhead cost for the year is $1,044,000 and expected labor hours are 72,600 hours; 32,600 for drills and 40,000 for saws. The company is considering using ABC for applying overhead to their products, instead of a single traditional overhead rate. They have broken down their overhead costs into the following cost pools and cost drivers. Cost Pools Estimated Overhead $741,600 Machine Setup Inspection $302,400 Cost Driver Number of Setups Number of Inspections Expected Use of Drivers 10,000 setups 12,600 inspections Usage by Drills 5,600 6,800 Usage by Saws 4,400 5,800 Answer the following questions based on the data above: 1. Compute the single traditional overhead rate. (4 pts) 2. How much overhead is applied to Drills using the single overhead rate? (3 pts) 3. How much overhead is applied to Saws using the single overhead rate? (3 pts) 4. Compute the overhead rates for the Machine Setup cost pool using ABC. (5 pts) 5. Compute the overhead rates for the Inspection cost pool using ABC. (5 pts) 6. How much overheads is applied to Drills using ABC rates? (5 pts) 7. How much overhead is applied to Saws using ABC rates? (5 pts) A company manufactures two products, Drills and Saws. Their total estimated overhead cost for the year is $1,044,000 and expected labor hours are 72,600 hours; 32,600 for drills and 40,000 for saws. The company is considering using ABC for applying overhead to their products, instead of a single traditional overhead rate. They have broken down their overhead costs into the following cost pools and cost drivers. Cost Pools Estimated Overhead $741,600 Machine Setup Inspection $302,400 Cost Driver Number of Setups Number of Inspections Expected Use of Drivers 10,000 setups 12,600 inspections Usage by Drills 5,600 6,800 Usage by Saws 4,400 5,800 Answer the following questions based on the data above: 1. Compute the single traditional overhead rate. (4 pts) 2. How much overhead is applied to Drills using the single overhead rate? (3 pts) 3. How much overhead is applied to Saws using the single overhead rate? (3 pts) 4. Compute the overhead rates for the Machine Setup cost pool using ABC. (5 pts) 5. Compute the overhead rates for the Inspection cost pool using ABC. (5 pts) 6. How much overheads is applied to Drills using ABC rates? (5 pts) 7. How much overhead is applied to Saws using ABC rates? (5 pts)

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To answer these questions well go step by step 1 Compute the single traditional overhead rate The single traditional overhead rate is calculated by di... View the full answer