Question

Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at...

Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100000 for the year.

Activity Cost Pool Cost Driver Est. Overhead Cost Driver Activity
Ordering and Receiving Orders $   140000 500 orders
Machine Setup Setups 315000 450 setups
Machining Machine hours 1562500 125000 MH
Assembly Parts 1240000 1000000 parts
Inspection Inspections 320000

500 inspections

If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is

$0.14 per part.

$280 per order.

$1.40 per direct labor hour.

$7155 per order.
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Answer #1
Answer:
Overhead application rate for ordering and receiving based on activity-based costing
                  = Estimated overhead / Number of Orders
                  =   $ 140,000 / 500 Orders
                  =     $ 280 per Oder
Overhead application rate   =    $ 280 per Oder
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