Question

Chan Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic.

Activity Expected Costs Expected Activity
Handling materials $ 625,000 100,000 parts
Inspecting product 900,000 1,500 batches
Processing purchase orders 105,000 700 orders
Paying suppliers 175,000 500 invoices
Insuring the factory 300,000 40,000 square feet
Designing packaging 75,000 2 models

1. Chan Company Compute a single plantwide overhead rate assuming that the company assigns overhead based on 110,000 budgeted direct labor hours.
2. In January of this year, the fast model required 3,500 direct labor hours and the standard model required 7,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.

Answer 1

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Step-by-step explanation:

Activity Type Total Overhead Cost Activity Activity Rate ( Overhead Cost /Activity)

Handling Materials 6,25,000 1,00,000 6.25 per part

Inspecting Products 9,00,000 1,500 600.00 per batch

Processing Pur Order 1,05,000 700 150.00 per order

Paying Supplies 1,75,000 500 350.00 per invoice

Insuring 3,00,000 40,000 7.50 per Sqr Feet

Designing Packaging 75,000 2 37,500.00 perPack