9 25 points) Hayward Industries manufactures dining chairs and tables. The follo

Question

9 25 points) Hayward Industries manufactures dining chairs and tables. The following information is available: Dining Chairs Tables Total Cost 600 470 2,400 Machine setups $48,000 $72,000 200 Labor hours 2,600 Hayward is considering switching from one overhead rate based on labor hours to activity-based costing. Perform the following analyses for these two components of overhead a. Compute total machine setups and inspection costs assigned to each product, using a single overhead rate. Compute total machine setups and inspection costs assigned to each product, using activity- based costing b. c. Comment on your findings

Explanation / Answer

a Single Overhead rate =(48000+72000)/(2600+2400)                  24 Per Labor Hr. Dining Chairs=2600*24          62,400 Tables=2400*24          57,600 Total      1,20,000 b Activity Based Costing Machine Setup Machine Setup rate =(48000)/(600+200)                  60 Per Machine Setup Inspections Inspection rate =(72000)/(250+470)                100 Per Inspection Dining Chairs cost=(200*60+250*100)          37,000 Tables cost=(600*60+470*100)          83,000 Total Cost      1,20,000 c The allocation based on actvity is more scientific and accurate gives best result for analysis of profit

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