Question

last year, long haul trucking spent 3,350 hours on logistics, for total logistics-related overhead costs of $77,050. this year, long haul expects to spend 3,600 hours on logistics. if long haul uses the same activity-based overhead rate this year as it did last year, how much should the firm expect to spend on logistics-related overhead in the year ahead?

Answer 1

To calculate the expected logistics-related overhead for the year ahead, we need to determine the activity-based overhead rate by dividing the total logistics-related overhead costs by the total number of hours spent on logistics. Then, we can multiply the activity-based overhead rate by the projected number of hours on logistics to find the expected logistics-related overhead.

Step-by-step explanation:

To determine how much the firm should expect to spend on logistics-related overhead in the year ahead, we need to calculate the activity-based overhead rate. The activity-based overhead rate is the total logistics-related overhead costs divided by the total number of hours spent on logistics.

Therefore, the activity-based overhead rate is $77,050 / 3,350 = $23.04 per hour.

Now, we can calculate the expected logistics-related overhead for the year ahead by multiplying the activity-based overhead rate by the projected number of hours on logistics:

Expected logistics-related overhead = $23.04 per hour x 3,600 hours = $82,944.