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 29,000 Oil, heating 19,000 Electricity, plant lighting 21,000 Engineering prototypes 60,000 Depreciation, plant 210,000 Electricity, machinery 36,000 Machine maintenance wages 19,000