Question

Canton Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:________.

Cost Pool Overhead Costs Activity-cost driver
Materials handling $50,000 90,000 orders
Machine maintenance 300,000 15,000 maintenance hours
Setups $238,160 45,800 setups
Inspections $144,840 21,300 inspections
Total support costs $733,000
Production units:_______.
Regular 9.000,000 units
A. $5.20 per setup
B. $6.80 per setup
C. $4.26 per setup
D. $20.00 per setup

Answer 1

The correct answer is A.

Step-by-step explanation:

Giving the following information:

Cost Pool Overhead Costs Activity-cost driver

Setups: $238,160 - 45,800 setups

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

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

Setup= 238,160/45,800= $5.2 per setup