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For 2017, the company had 11,000 orders and used 50,000 machine
hours, and labor hours totaled 500,000. What is the total overhead
applied?
BE4-12
Spin Cycle Architecture uses three activity pools to apply overhead to
its projects. Each activity has a cost driver used to allocate the
overhead costs to the projects. The activities and related overhead costs
are as follows: initial concept formation $40,000, design $300,000, and
construction oversight $100,000. The cost drivers and expected use are
as follows.
Activities
Cost Drivers
Use of Cost Drivers per Activity
Initial concept formation
20

Number of project changes

Design
150,000

Square feet

Construction oversight
100

Number of months

Expected

(a) Compute the predetermined overhead rate for each activity.
(b) Classify each of these activities as unit-level, batch-level, productlevel, or facility-level.
E4-1
Saddle Inc. has two types of handbags: standard and custom. The
controller has decided to use a plant wide overhead rate based on
direct labor costs. The president has heard of activity-based costing
and wants to see how the results would differ if this system were used.