Question 8 (8 points)

Question

Based on the expected data below, answer the following questions:

1. What would the traditional overhead rate be in a labour intensive firm?
2. What would the traditional overhead rate be in a capital-intensive firm?
3. Using traditional costing, how much overhead would be allocated to total inventory?
4. Using activity-based costing, how much overhead would be allocated to total inventory?
5. Using traditional costing, how much overhead would be allocated to Product A which is primarily a function of direct labour hours?
6. Using activity-based costing, what are the rates for labour activity and machine activity?
7. Using activity-based costing, how much overhead would be allocated to Product B which is primarily a function of machine hours?

Data Set

Data for Question 8

Data

Indirect Labour

Other Overheads

Expected Direct Labour Hours - Product A

Expected Direct Labour Hours - Product B

Expected Machine Hours - Product A

Expected Machine Hours - Product B

Value

750,000

250,000

30,000

20,000

1,000

4,000