Beta Corporation manufactures two products: Product 1 and Product 2. The company uses a plantwide...
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Beta Corporation manufactures two products: Product 1 and Product 2. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products 1 and 2. Activity Cost Pool Activity Measure Total Cost Total Activity Machining Machine-hours $ 207,000 9,000 MHs Machine setups Number of setups $ 140,000 350 setups Product design Number of products S 98,000 2 products Order size Direct labor-hours $ 340,000 10,000 DLHS Product 1 6,000 Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Product 2 3,000 160 190 1 1 4,000 6,000 Required: 1. Compute the plantwide (POHR) overhead rate. 2. Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product 1? How much is allocated to Product 2? 3. Using the ABC system, compute the activity rate for each activity cost pool. 4. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product 12 Using the ABC system, how much total manufacturing overhead cost would be assigned to Product 2
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