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Question
A company has two products: AA and BB. It uses a plantwide overhead allocation method based on activity 33 and has prepared the following analysis showing budgeted costs and activities. Use this information to compute the companys plantwide overhead rate.
| Activity Cost Pool | Budgeted Overhead Cost | Budgeted Activity | ||
| Product AA | Product BB | Total | ||
| Activity 11 | $40,000 | 100 | 400 | 500 |
| Activity 22 | $55,000 | 500 | 250 | 750 |
| Activity 33 | $90,000 | 300 | 1,700 | 2,000 |
| Total budgeted overhead | $185,000 | |||
Answer
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