Weisman, Inc. uses activity-based costing as the basis for information to set prices for its six lines of seasonal coats. Activity Cost Pools Estimated Overhead Expected Use of Cost Drivers per Activity Designing $450,000 12,200 designer hours Sizing and cutting 4,110,000 155,000 machine hours Stitching and trimming 1,500,000 84,000 labor hours Wrapping and packing 343,000 30,500 finished units Compute the activity-based overhead rates using the following budgeted data for each of the activity cost pools. (Round answers to 2 decimal places, e.g. 12.25.) Activity-based overhead rates Designing $enter a dollar amount rounded to 2 decimal places per designer hour Sizing and cutting $enter a dollar amount rounded to 2 decimal places per machine hour Stitching and trimming $enter a dollar amount rounded to 2 decimal places per labor hour Wrapping and packing $enter a dollar amount rounded to 2 decimal places per finished unit

2.

Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2017.

Activity Cost Pools		Estimated Overhead		Expected Use of Cost Drivers per Activity
Ordering and receiving		$95,953		14,300	orders
Food processing		497,150		61,000	machine hours
Packaging		1,680,210		441,000	labor hours

For 2017, the company had 10,100 orders and used 50,600 machine hours, and labor hours totaled 494,000.

(a)

Calculate the overhead rates for each activity. (Round answers to 2 decimal places, e.g. 12.25.)

		Overhead Rates
Ordering and receiving		$enter a dollar amount rounded to 2 decimal places	per order
Food processing		$enter a dollar amount rounded to 2 decimal places	per machine hour
Packaging		$enter a dollar amount rounded to 2 decimal places	per labor hour

3.

Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the companys operations.

		Standard		Custom
Direct labor costs		$41,000		$99,000
Machine hours		1,430		1,330
Setup hours		110		420

Total estimated overhead costs are $304,000. Overhead cost allocated to the machining activity cost pool is $197,000, and $107,000 is allocated to the machine setup activity cost pool.

(a)

Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.)

Predetermined overhead rate

enter the predetermined overhead rate in percentages of direct labor cost rounded to 2 decimal places

% of direct labor cost