Single Plantwide Rate and Activity-Based Costing

Whirlpool Corporation conducted an activity-based costing studyof its Evansville, Indiana, plant in order to identify its mostprofitable products. Assume that we select three representativerefrigerators (out of 333): one low-, one medium-, and onehigh-volume refrigerator. Additionally, we assume the followingactivity-base information for each of the three refrigerators:

Three Representative Refrigerators	Number of Machine Hours		Number of Setups		Number of Sales Orders		Number of Units
Refrigerator—Low Volume	20		22		66		100
Refrigerator—Medium Volume	320		20		147		1,600
Refrigerator—High Volume	1,000		15		220		5,000	Prior to conducting the study, the factory overhead allocationwas based on a single machine hour rate. The machine hour rate was$100 per hour. After conducting the activity-based costing study,assume that three activities were used to allocate the factoryoverhead. The new activity rateinformation is assumed to be asfollows: Machining Activity Setup Activity Sales Order Processing Activity Activity rate $100 $150 $30 Complete the following table, using the single machine hour rateto determine the per-unit factory overhead for each refrigerator(Column A) and the three activity-based rates to determine theactivity-based factory overhead per unit (Column B). Finally,compute the percent change in per-unit allocation from the singleto activity-based rate methods (Column C). If required, round all per unit answers to the nearest cent.Round percents to one decimal place. For column C, use the minussign to indicate a negative or decrease. Column A Column B Column C Product Volume Class Single Rate Overhead Allocation Per Unit ABC Overhead Allocation Per Unit Percent Change in Allocation Low $ $ % Medium $ $ % High $ $ %