90.2K

Verified Solution

Link Copied!

Allocate overhead using a single plantwide rate, multiple department rates, and activity-based costing Big Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows: The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: The activity-base usage quantities and units produced for the two products follow: and activity-based costing. The plantwide overhead method allocates \$ of overhead to each product, while the multiple production department method allocates $ overhead to receivers and $ to loudspeakers. Both the plantwide and multiple production department overhead methods distort the allocation of overhead because they account for how each product consumes overhead. In contrast, activity based costing allocates $ of factory overhead to receivers and $ to loudspeakers. Activity-based costing accurately allocates factory overhead because for how each product consumes overhead. Loudspeakers have setups than do receivers. In addition, loudspeakers require quality control inspections than do receivers. As a result, loudspeakers have activity costs than receivers. 1. Determine a plantwide overhead rate based upon direct labor hours. Direct labor overhead rate: per direct labor hour

Answer & Explanation Solved by verified expert

See Answer