Calculate predetermined oh rate

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Reference no: EM131194621

Question:

Claire Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products.

Activity Pool


Department Costs


Cost Driver

Binding



$231,296



Number of units

Printing



812,864



Machine hours

Product design



199,680



Change orders

General



644,384



None

   Total overhead costs



$1,888,224




Other information is as follows:



Tablets


Books


Units


62,700


20,400


Direct materials cost per unit


$3.02


$10.31


Direct labor cost per unit


$4.17


$7.97


Direct labor hours


25,100


16,500


Machine hours


126,000


122,000


Change orders


1,200


3,000


1. Calculate predetermined OH rate.

2. Determine the unit product cost for Tablets and Books using the traditional costing system.

3. Calculate ABC rates.

4. Determine the unit product cost for Tablets and Books using the activity-based costing system.

5. Show that General cost is the difference between the total overhead costs allocated to products under the traditional system and the total cost allocated to products under the activity-based costing system.

Reference no: EM131194621

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