Sitwell Corporation manufactures titanium and aluminum tennis racquets.Sitwell's total overhead costs consist of assembly costs and inspection costs.The following information is available: $\begin{array}{cccc}\text { Cost }&\text { Titanium }&\text { Aluminum }&\text { Iotal Cost }\\hline
\text { Assembly } & 500 \text { mach. hours } & 500 \text { mach. hours } & \$ 45,000 \
\text { Inspections } & 350 & 150 & \$ 75,000\&\text { 2,100 labor hours }&\text { 1,900 labor hours }
\end{array}$ Sitwell is considering switching from one overhead rate based on labor hours to activity-based costing. Total overhead costs assigned to titanium racquets, using a single overhead rate, are

Question

Quizplus · Accepted Answer

The single overhead rate is calculated by dividing total overhead costs by total labor hours: ($45,000 + $75,000) / (2,100 + 1,900) = $30 per labor hour. For titanium racquets: 2,100 labor hours * $30 = $63,000.

Sitwell Corporation Manufactures Titanium and Aluminum Tennis Racquets Sitwell Is Considering Switching from One Overhead Rate Based on Costs