Fischer Company identified the following activities, costs and activity drivers.
$$\begin{array} { | l | c | c | }
\hline \text { Activity } & \text { Expected Costs } & \text { Expected Activity } \
\hline \text { Handling parts } & \$ 425,000 & \begin{array} { c }
25,000 \text { parts in } \
\text { stock }
\end{array} \
\hline \text { Inspecting product } & \$ 390,000 & 940 \text { batches } \
\hline \text { Processing purchase orders } & \$ 220,000 & 440 \text { orders } \
\hline \text { Designing packaging } & \$ 230,000 & 5 \text { models } \
\hline
\end{array}$$
(a) Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals).
(b) Compute separate rates for each of the four activities using the activity based costing.

Question

Fischer Company identified the following activities, costs and activity drivers.
$$\begin{array} { | l | c | c | } 
\hline \text { Activity } & \text { Expected Costs } & \text { Expected Activity } \
\hline \text { Handling parts } & \$ 425,000 & \begin{array} { c } 
25,000 \text { parts in } \
\text { stock }
\end{array} \
\hline \text { Inspecting product } & \$ 390,000 & 940 \text { batches } \
\hline \text { Processing purchase orders } & \$ 220,000 & 440 \text { orders } \
\hline \text { Designing packaging } & \$ 230,000 & 5 \text { models } \
\hline
\end{array}$$
(a) Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals).
(b) Compute separate rates for each of the four activities using the activity based costing.

Quizplus · Accepted Answer

The Answer of Fischer Company identified the following activities, costs and activity drivers.
$$\begin{array} { | l | c | c | } 
\hline \text { Activity } & \text { Expected Costs } & \text { Expected Activity } \
\hline \text { Handling parts } & \$ 425,000 & \begin{array} { c } 
25,000 \text { parts in } \
\text { stock }
\end{array} \
\hline \text { Inspecting product } & \$ 390,000 & 940 \text { batches } \
\hline \text { Processing purchase orders } & \$ 220,000 & 440 \text { orders } \
\hline \text { Designing packaging } & \$ 230,000 & 5 \text { models } \
\hline
\end{array}$$
(a) Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals).
(b) Compute separate rates for each of the four activities using the activity based costing.

Fischer Company Identified the Following Activities, Costs and Activity Drivers