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Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100000 for the year.
Activity Cost Pool Cost Driver Est. Overhead Cost Driver Activity
Ordering and Receiving Orders $140000 500 orders
Machine Setup Setups 315000 450 setups
Machining Machine 1562500 125000 MH
hours
Assembly Parts 1240000 1000000 parts
Inspection Inspections 320000 500 inspections
If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is:_________.

Respuesta :

Answer:

$280 per order

Explanation:

The computation of the overhead application rate for ordering and receiving is shown below:

= Estimated overhead cost for ordering and receiving orders ÷  cost driver activity

= $140,000 ÷ 500 orders

= $280 per order

In order to determine the overhead application rate for ordering and receiving we simply divided the estimated overhead cost by the cost driver activity

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