Mangal R.

asked • 23d

overhead Cost utilizing ABC, rate per machine

The controller for Ocean Sailboats Inc., a company which uses an automated process to make sailboats, established the following overhead cost pools and cost drivers: Overhead Cost Pool Budgeted Overhead Cost Driver Estimated Cost Driver Level Machine setups $250,500 # of setups 500 setups Quality control 419,500 # of inspections 2,500 inspections Other overhead cost 180,000 # of machine hrs 20,000 machine hrs A recent order for sailboats used: Machine setups 50 setups Quality inspections 305 inspections Machine hours 2,024 machine hours


1. What is the overhead rate per machine hour if the number of machine hours is used as a single cost driver under traditional costing system?

2. Utilizing traditional costing, how much overhead is assigned to the order based on machine hours as a single cost driver?

3. Utilizing ABC, how much total overhead is assigned to the order?

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