Question

Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go-karts: Deluxe and Basic.

Activity	Expected Costs			Expected Activity
Handling materials	$	675,000			100,000	parts
Inspecting product		950,000			1,500	batches
Processing purchase orders		155,000			700	orders
Paying suppliers		225,000			500	invoices
Insuring the factory		350,000			40,000	square feet
Designing packaging		125,000			2	models

   
Required:
1. Compute a single plantwide overhead rate for the year, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours.
2. In January of this year, the Deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.

Complete this question by entering your answers in the tabs below.

• Required 1

• Compute a single plantwide overhead rate for the year, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours.

• Required 2

In January of this year, the Deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate. (Round "OH cost" answers to 2 decimal places.)

	Total DL Hours required Plantwide OH Rate Total Overhead Cost Deluxe model Basic model

Answer 1

Req 1)	Calculation of Plantwide overhead rate
	Overhead rate = Total estimated overhead cost / Total Budgeted direct labour hours
	=2480000/125000
	19.84	per direct labour hours
	Activity	Expected Costs
	Handling materials	675,000
	Inspecting product	950,000
	Processing purchase orders	155,000
	Paying suppliers	225,000
	Insuring the factory	350,000
	Designing packaging	125,000
	Total	2,480,000
Req 2		Deluxe Model	Basic Model
	Direct labour hour	2500	6000
	Plantwide overhead rate	19.84	19.84
	Total Overhead allocated	49600	119040