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Question: computer parts inc a manufacturer of computer chips employs activitybased...

Question details

Computer Parts, Inc., a manufacturer of computer chips, employs activity-based costing. The following budgeted data for each of the activity cost pools are provided below for the year.

Activity Cost Pools

Estimated Overhead

Expected Use of Cost Drivers per Activity

Ordering and receiving

$100,000

15,000 orders

Etching

440,000

60,000 machine hours

Soldering

1,560,000

440,000 labour hours

In the year, the company had 11,000 orders and used 50,000 machine hours, and labour hours totalled 500,000.

Please using the data provided to answer the following questions:


(a) What is the pre-determined overhead rate for each of the following activities?

Ordering and receiving: $ ______ per order
Etching: $ _______ per machine hour
Soldering: $ ________ per labour hour

(b) What is the amount of overhead applied to each activity?

Ordering and receiving $ __________
Etching: $ ______
Soldering: $ ________

(c) What is the total applied overhead? _________

(d) If the actual total overhead cost was $2,430,000 was the overhead under- or over-applied and by how much?

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