Wellington Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs:
Setting up equipment $1,064,000
Other overheard $4,256,000
Setting up equipment is based on setup hours, and other overhead is based on oven hours. Wellington produces two products, Fudge and Cookies.
Information on each product is as follows:
Fudge Cookies
Units produced 8,000 445,000
Setup hours 15,200 3,800
Oven hours 3,800 26,600
Required:
Round your answers to the nearest whole dollar, unless otherwise directed.
1. Calculate the activity rate for (a) setting up equipment and (b) other overhead.
2. How much total overhead is assigned to Fudge using ABC?
3. What is the unit overhead assigned to Fudge using ABC? Round to the nearest cent.
4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours.
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