Smith Machining makes three products. The company's annual budget includes $1,200,000 of overhead. In the...
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Smith Machining makes three products. The company's annual budget includes $1,200,000 of overhead. In the past, the company allocated overhead based on expected capacity of 40,000 direct labor hours. The company recently implemented an activity-based costing system and has determined that overhead costs can be broken into four overhead pools: order processing, setups, milling, and shipping. The following is a summary of company information: Order processing Setups Milling Shipping Expected Cost $ 275,000 180,000 490,000 255,000 $ 1,200,000 Expected Activities 20,000 orders 600 setups 50,000 machine hours 25,000 shipments (a) Calculate the company's traditional overhead rate based on direct labor hours. $ / DLH Overhead rate (b) Calculate the company's overhead rates for each of the activity-based costing pools. (Round answers to 2 decimal places, e.g. 15.25.) Order processing $ per order $ Setups per setup $ per machine hour Milling $ $ Shipping per shipment
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