Potterii sells its products to large box stores and recently added a retail line of products to sell directly to consumers. These estimates are to be used in determining the overhead allocation rate for ABC: Cost Pool Cost Driver Estimated Overhead Wholesale Retail Ordering Number of orders $120,000 $180,000 $60,000 Machine setups Number of setups $85,000 $200,000 $140,000 Inspection Number of inspections $75,000 $60,000 $15,000 What would be the predetermined rate for each cost pool? a. Ordering b. Machine setups c. Inspection
Potterii sells its products to large box stores and recently added a retail line of products to sell directly to consumers. These estimates are to be used in determining the overhead allocation rate for ABC: Cost Pool Cost Driver Estimated Overhead Wholesale Retail Ordering Number of orders $120,000 $180,000 $60,000 Machine setups Number of setups $85,000 $200,000 $140,000 Inspection Number of inspections $75,000 $60,000 $15,000 What would be the predetermined rate for each cost pool? a. Ordering b. Machine setups c. Inspection
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 1EA: Steeler Towel Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor...
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Potterii sells its products to large box stores and recently added a retail line of products to sell directly to consumers. These estimates are to be used in determining the overhead allocation rate for ABC:
| Cost Pool | Cost Driver | Estimated Overhead | Wholesale | Retail |
| Ordering | Number of orders | $120,000 | $180,000 | $60,000 |
| Machine setups | Number of setups | $85,000 | $200,000 | $140,000 |
| Inspection | Number of inspections | $75,000 | $60,000 | $15,000 |
What would be the predetermined rate for each cost pool?
a. Ordering
b. Machine setups
c. Inspection
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