Reference no: EM131262342
Plum Tired manufactures tires for dune buggies and has two different products:
Nubby Tires: 5,000 produced; 400 requisitions, 200 setups, 200 inspections
Smooth Tires: 10,000 produced; 600 requisitions, 300 setups, 400 inspections
The following information is available:
Total overhead costs of $171,000 are broken out as follows:
Materials Handling - $60,000 - Cost driver is number of requisitions
Machine setups - $54,000 - Cost driver is number of setups
Inspections - $57,000 - Cost driver is number of inspections
Estimated Direct Labor hours used: 1,900
1. Using TRADITIONAL costing, and assuming overhead is applied based on direct labor hours, compute the predetermined overhead rate. (i.e. $25.00)
2. Using Activity Based Costing, how much of the $171,000 in factory overhead would be applied to the nubby tires? (i.e. $25,000)
3. Using Activity Based Costing, how much of the $171,00 in factory overhead would be applied to the smooth tires? (i.e. $25,000)
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