Wellington Chocolate Company uses activity-based costing. The controller identified two activities and budgeted overhead costs based...

Wellington Chocolate Company uses activity-based costing. The controller identified two activities and budgeted overhead costs based on these activities:

Setting up equipment $280,000

Baking $5,800,000

Setting up equipment is based on setup hours, and baking is based on oven hours. Wellington produces two products, fudge, and cookies. Information on each product is as follows

	fudge	cookies
Units produced	8,000	445,000
Setup hours	4,000	1,000
Oven hours	5,000	35,000

Required (round your answers to the nearest whole dollar, unless otherwise directed):

1. Calculate the activity rate for setting up equipment

2. Calculate the activity rate for baking

3. How much total overhead is assigned to Fudge?

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Part 1 and 2

Activity	Overhead cost	Total Activities	Activity Rate
	a	b	a/b
Setting up	$ 280,000	5,000	$ 56
Baking	$ 5,800,000	40,000	$ 145

Part 3

	Activity rate	Activities	Overhead assigned
	a	b	*ab**
Settin up	$ 56	4,000	$ 224,000
Bakint	$ 145	5,000	$ 725,000

Overhead is assigned to fudge			$ 949,000

ekkarill92 answered 2 months ago

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