Jones Manufacturing Company makes two products.The company's budget includes $500,000 of overhead.In the past,the company allocated overhead based on estimated total direct labor hours of 20,000.Jones recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: processed purchase orders,machine setups,and good shipped.The following is a summary of company information:

Required:

a. Calculate the company’s overhead rate based on total direct hours.

b. Calculate the company’s overhead rates using the activity-based costing pools.

Question

Jones Manufacturing Company makes two products.The company's budget includes $500,000 of overhead.In the past,the company allocated overhead based on estimated total direct labor hours of 20,000.Jones recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: processed purchase orders,machine setups,and good shipped.The following is a summary of company information:
  
Required:

a.	Calculate the company’s overhead rate based on total direct hours.

b.	Calculate the company’s overhead rates using the activity-based costing pools.

Quizplus · Accepted Answer

The Answer of Jones Manufacturing Company makes two products.The company's budget includes $500,000 of overhead.In the past,the company allocated overhead based on estimated total direct labor hours of 20,000.Jones recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: processed purchase orders,machine setups,and good shipped.The following is a summary of company information:
  
Required:

a.	Calculate the company’s overhead rate based on total direct hours.

b.	Calculate the company’s overhead rates using the activity-based costing pools.

Jones Manufacturing Company Makes Two Products