Question

Coronado, Inc. uses activity-based costing as the basis for information to set prices for its six lines of seasonal coats.

Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers per Activity
Designing $452,925 13,500 designer hours
Sizing and cutting 4,250,150 167,000 machine hours
Stitching and trimming 1,400,525 75,500 labor hours
Wrapping and packing 339,450 31,000 finished units

Required:
Compute the activity-based overhead rates using the following budgeted data for each of the activity cost pools.

Answer 1

Activity Cost Pools Est. Overhead Est. Use Rate Per

Designing $452,925 $13,500 $33.55 Designer hours

Sizing and cutting $4,250,150 $167,000 $25.45 Machine hours

Stitching & trimming $1,400,525 $75,500 $18.55 Labor hours

Wrapping & packing $339,450 $31,000 $10.95 Finished units