Using activity based costing (ABC), calculate the overhead rate for the following activity: Design. That is, what is the overhead rate per hour of design? NOTE: Enter only the number of dollars, do not enter the dollar, "$", symbol. Therefore if your answer is "$10", enter only "10".
Using activity based costing (ABC), calculate the overhead rate for the following activity: Design. That is, what is the overhead rate per hour of design? NOTE: Enter only the number of dollars, do not enter the dollar, "$", symbol. Therefore if your answer is "$10", enter only "10".
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Question 4.5**
Using activity based costing (ABC), calculate the overhead rate for the following activity: **Design**. That is, what is the overhead rate per hour of design? **NOTE**: Enter only the number of dollars, do not enter the dollar, "$", symbol. Therefore if your answer is "$10", enter only "10".
[Input box for answer]
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**Question 39**
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**Question 4.6**
Using activity based costing (ABC), calculate the overhead rate for the following activity: **Installation**. That is, what is the overhead rate per hour of installation to two decimal places? **NOTE**: Enter only the number of dollars, do not enter the dollar, "$", symbol. Therefore if your answer is "$10", enter only "10".
[Input box for answer]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad9f85fe-0b70-4ba7-9aaa-2221d86301ac%2F2cc45bef-2052-4509-a5f5-1b0a32e0e9bb%2F41ui477_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Question 4.5**
Using activity based costing (ABC), calculate the overhead rate for the following activity: **Design**. That is, what is the overhead rate per hour of design? **NOTE**: Enter only the number of dollars, do not enter the dollar, "$", symbol. Therefore if your answer is "$10", enter only "10".
[Input box for answer]
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**Question 39**
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**Question 4.6**
Using activity based costing (ABC), calculate the overhead rate for the following activity: **Installation**. That is, what is the overhead rate per hour of installation to two decimal places? **NOTE**: Enter only the number of dollars, do not enter the dollar, "$", symbol. Therefore if your answer is "$10", enter only "10".
[Input box for answer]
Transcribed Image Text:**Clear Solutions: Activity-Based Costing Analysis**
Clear Solutions manufactures and installs standard and custom-designed shop windows. Last year, the company incurred $2,400,000 in overhead costs with a total of 30,000 direct labor hours. After implementing activity-based costing (ABC), the accountant identified the following related information:
**Activities and Overhead Allocation:**
| Activity | Allocation Base | Proportion of Overhead Cost |
|-----------------------------|----------------------------|-----------------------------|
| Purchasing | Number of purchase orders | 20% |
| Material delivery and handling | Number of deliveries | 10% |
| Design | Hours of design time | 20% |
| Installation | Hours of installation time | 50% |
**Activity Numbers for Windows Production:**
| Activity | Standard | Custom |
|------------------------------|----------|--------|
| Number of purchase orders | 1,000 | 1,400 |
| Number of deliveries | 200 | 400 |
| Hours of design time | 200 | 800 |
| Hours of installation time | 700 | 600 |
**Order Analysis:**
During the past year, Clear Solutions accepted order no. 159 for one custom window installation, requiring:
- Direct labor hours: 20
- Number of purchase orders: 3
- Number of deliveries: 2
- Hours of design time: 5
- Hours of installation time: 4
This case demonstrates the implementation of activity-based costing to effectively allocate overhead costs based on specific activities, providing more accurate cost assessments for both standard and custom window installs.
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