Fischer Company identified the following activities, costs, and activity drivers
ID: 2469904 • Letter: F
Question
Fischer Company identified the following activities, costs, and activity drivers:
Activity Expected Costs Expected Activity
Handling parts $425,000 25,000 parts in stock
Inspecting product $390,000 940 batches
Processing purchase orders $220,000 440 orders
Designing packaging $230,000 5 models
a. Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals).
b. Compute separate rates for each of the four activities using the activity based costing.
Answer: a. ($425,000 + $390,000 + $220,000 + $230,000)/70,000 DLH = $18.07 per DLH
b. Handling: $425,000/25,000 parts = $17/part Inspecting:
$390,000/940 batches = $414.89/batch
Processing: $220,000/440 orders = $500/order
Designing: $230,000/5 models = $46,000/model
Just wanted to verify work done. If it is done correctly please let me know, if something is amiss please advise with instruction on how to correct it. Thank you
Explanation / Answer
Perfect Work!! Your all parts are correct .
For part B:
Handling : it should be $ 17 per parts in stock (and not inspecting)
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