ACC 560 MART Learn by Doing/acc560mart.com ACC 560 MART Learn by Doing/acc560mart.com | Page 19
Total estimated overhead costs are $240,000. Overhead cost allocated
to the machining activity cost pool is $140,000, and $100,000 is
allocated to the machine setup activity cost pool.
Instructions:
a. Compute the overhead rate using the traditional (plant wide)
approach.
b. Compute the overhead rates using the activity-based costing
approach.
c. Determine the difference in allocation between the two approaches.
E4-6
Santana Corporation manufactures snowmobiles in its Blue
Mountain, Wisconsin, plant. The following costs are budgeted for the
first quarter's operations.
Machine setup, indirect materials
4,000
Inspections
16,000
Tests
4,000
Insurance, plant
110,000
Engineering design
140,000
Depreciation, machinery
520,000
Machine setup, indirect labor
20,000
Property taxes
Oil, heating
29,000
19,000