Fischer Company identified the following activities, costs, and activity drivers:ActivityExpected CostsExpected ActivityHandling parts$425,00025,000 parts in stockInspecting product$390,000940 batchesProcessing purchase orders$220,000440 ordersDesigning packaging$230,0005 modelsa. 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.
What will be an ideal response?
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
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