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23 May, 08:40

EA11.

LO 6.3Potterii sells its products to large box stores and recently added a retail line of products to sell directly to consumers. These estimates are to be used in determining the overhead allocation rate for ABC:

What would be the predetermined rate for each cost pool?

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  1. 23 May, 11:39
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    Predetermined rates for each cost pool

    Ordering = $120,000

    240,000 orders

    = $0.50 per order

    Machine set-up = $85,000

    340,000 set-ups

    = $0.25 per set-up

    Inspection = $75,000

    75,000 inspections

    = $1 per inspection

    Explanation:

    The predetermined rates are obtained by dividing the estimated overhead for each cost pool by the cost driver.
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