Problem $17-1$A $($Static$)$ Comparing plantwide rate method and activity$-$based costing LO P$1,$ P$3$

Craftmore Machining reports the following budgeted overhead cost and related data for this year.

Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage

Assembly $ $390,000$ Direct labor hours $($DLH$)13,000$

Product design $60,000$ Engineering hours $($EH$)1,000$

Electricity $20,000$ Machine hours $($MH$)10,000$

Setup $50,000$ Setups $400$

Total $ $520,000$

Required:

Compute a single plantwide overhead rate assuming the company allocates overhead cost based on $13,000$ direct labor hours.

Job $31$ used $200$ direct labor hours and Job $42$ used $480$ direct labor hours. Allocate overhead cost to each job using the single plantwide overhead rate from part $1.$

Compute an activity rate for each activity using activity$-$based costing.

Allocate overhead costs to Job $31$ and Job $42$ using activity$-$based costing.

Activity Cost Driver Activity Usage

Job $31$ Job $42$

Direct labor hours $($DLH$)200480$

Engineering hours $($EH$)2632$

Machine hours $($MH$)5060$

Setups $46$