Question

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 $444,000 13,000 designer hours
Sizing and cutting 4,210,000 169,000 machine hours
Stitching and trimming 1,490,000 75,500 labor hours
Wrapping and packing 332,000 32,000 finished units

Compute the activity-based overhead rates using the following budgeted data for each of the activity cost pools.

Answer 1

Results are below.

Step-by-step explanation:

To calculate the activities rate, we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Designing= 444,000/13,000= $34.15 per designer hour

Sizing and cutting= 4,210,000 / 169,000= $24.91 per machine hour

Stitching and trimming= 1,490,000 / 75,500= $19.73 per labor hour

Wrapping and packing= 332,000 / 32,000= $10.38 per finished unit