Problem - Use of activity-based costing will result in the development of multiple activity-based overhead rates.
Windsor Co. incurs $881250 of overhead costs each year in its three main departments, machining ($500000), inspections ($250000) and packing ($131250). The machining department works 4000 hours per year, there are 600 inspections per year, and the packing department packs 1000 orders per year. Information about Windsor's two products is as follows:
Product X Product Y
Machining hours 1000 3000
Inspections 100 500
Orders packed 350 650
Direct labor hours 1700 1800
Using ABC, how much overhead is assigned to Product X this year?
$305048
$212604
$428036
$440625