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		Estimated Use of Cost Drivers per Activity
Designing		$425,000		10,000	designer hours
Sizing and cutting		3,952,500		150,000	machine hours
Stitching and trimming		1,398,750		75,000	labor hours
Wrapping and packing		300,000		30,000	finished units

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

Answer 1

Computation of activity-based overhead rates
Activity	Estimated Overhead Cost(A)	Activity Base	Usage of Activity Base(B)	Activity -based overhead rate(A/B)
Designing	$425,000	Designer hours	10,000	$42.5
Sizing and Cutting	$3,952,500	machine hours	150,000	$26.35
Stitching and trimming	$1,398,750	labor hours	75,000	$18.65
Wrapping and packing	$300,000	Finished units	30,000	$10