Question

Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2017. Activity Cost Pools Estimated Overhead Expected Use of Cost Drivers per Activity Ordering and receiving $80,934 12,300 orders Food processing 479,880 62,000 machine hours Packaging 1,485,180 446,000 labor hours For 2017, the company had 10,200 orders and used 50,400 machine hours, and labor hours totaled 504,000. Calculate the overhead rates for each activity. (Round answers to 2 decimal places, e.g. 12.25.) Overhead Rates Ordering and receiving $ Entry field with correct answer per order Food processing $ Entry field with correct answer per machine hour Packaging $ Entry field with correct answer per labor hour Link to Text Incorrect answer. Your answer is incorrect. Try again. What is the total overhead applied? Total overhead applied $

Answer 1

Solution 1:

Computation of Overhead rate of each activity - Spud Inc.
Activity	Estimated Overhead Cost	Activity Base	Expected Usage of cost driver	Activity Rate
					Ordering and Receiving	$80,934.00	Orders	12300	$6.58
Food Processing	$479,880.00	Machine hours	62000	$7.74
Packaging	$1,485,180.00	Labor hours	446000	$3.33
Total	$2,045,994.00

Solution 2:

Computation of overhead applied - Spud Inc.
Activity	Activity Rate	Usage of activity base	Overhead applied
Ordering and Receiving	$6.58	10200	$67,116.00
Food Processing	$7.74	50400	$390,096.00
Packaging	$3.33	504000	$1,678,320.00
Total			$2,135,532.00