Strike Company incurs about $430,000 in manufacturing overhead costs each month. The company works about 100,000 direct labor hours (DLH) per month, so the average overhead per DLH is $4.30. The following are the data regarding cost pools and drivers.

Cost Driver Amount in pool Amount of Activity

Direct labor hours $260,000 100,000 hours

Number of batches 140,000 500 batches

Engineering/design changes 30,000 120 times

You are to analyze 2 product lines using the existing method of allocating overhead costs on DLH and using activity-based rates. Bikers are the main line that the company makes in large batches while helmets are a specialty line that only a few customers buy. The following are the data regarding the 2 product lines:

Bikes Helmets

DLH 60,000 40,000

Number of batches 200 300

Engineering/design changes 70 50

Overhead allocated to the bikes under functional cost system is how much?

Overhead allocated to the helmets under functional cost system is how much?

Cost per DLH under ABC is how much?

Cost per batch under ABC is how much?

Cost per engineering time under ABC is how much?

Answer rating: 100% (QA)

Answer Overhead allocated to the bikes under functional cost system Overhea... View the full answer