Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is

Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2017 Estimated Overhead Expected Use of Cost Drivers per Activity Activity Cost Pools Ordering and receiving Food processing Packaging $94,582 479,085 13,100 orders 61,500 machine hours 1,395,280 428,000 labor hours For 2017, the company had 11,300 orders and used 51,200 machine hours, and labor hours totaled 491,000 Calculate the overhead rates for each activity. (Round answers to 2 decimal places, e.g. 12.25.) Overhead Rates Ordering and receiving Food processing Packaging 7.22 per order 7.79 per machine hour 3.26 per labor hour
What is the total overhead applied?
Total overhead applied $

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  1. Answer:

    Total allocated overhead= $2,081,094

    Explanation:

    Giving the following information:

    For 2017, the company had 11,300 orders and used 51,200 machine hours, and labor hours totaled 491,000

    Overhead rates for each activity:

    Ordering and receiving= $7.22 per order

    Food processing= $7.79 per machine hour

    Packaging= $3.26 per labor hour

    To allocate overhead, we need to use the following formula:

    Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

    Ordering and receiving= 7.22*11,300= $81,586

    Food processing= 7.79*51,200= $398,848

    Packaging= 3.26*491,000= $1,600,660

    Total overhead= $2,081,094

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