OBJEC Exercise 5-39 Comparing ABC and Plantwide Overhead Cost Assignments Wellington Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs: Setting up equipment $ 432,000 Other overhead 1,440,000 Setting up equipment is based on setup hours, and other overhead is based on oven hours. (Continued) Wellington produces two products, Fudge and Cookies. Information on each prode as follows: Fudge Cookies Units produced 8,000 445,000 Setup hours 6,400 1,600 Oven hours 1,600 8,000 Required: (Note: Round answers to two decimal places.) 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? 4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours. 5. How much total overhead is assigned to Fudge using the plantwide overhead rate? 6. CONCEPTUAL CONNECTION Explain why the total overhead assigned to Fudge is! different under the ABC system (i.e., using the activity rates) than under the non-ABC system (i.e., using the plantwide rate)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
