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    Costing

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    The controller for Ocean Sailboats Inc., a company which uses an automated process to make sailboats, established the following overhead cost pools and cost drivers:

    Budgeted Estimated
    Overhead Cost Pool Overhead Cost Driver Cost Driver Level
    Machine setups $250,500 # of setups 500 setups
    Quality control 419,500 # of inspections 2,500 inspections
    Other overhead cost 180,000 # of machine hrs 20,000 machine hrs

    A recent order for sailboats used:

    Machine setups 50 setups
    Quality inspections 305 inspections
    Machine hours 2,024 machine hours

    Required:

    (a) What is the overhead rate per machine hour if the number of machine hours is used as a single cost driver under traditional costing system?
    (b) Utilizing traditional costing, how much overhead is assigned to the order based on machine hours as a single cost driver?
    (c) Utilizing ABC, how much total overhead is assigned to the order?

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    https://brainmass.com/business/accounting/262550

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