Chrom Company manufactures two models, the XL and RD. It also has two departments, assembly and finishing. The company wants to assign budgeted overhead costs to its two different models to better understand the profitability of each model. The Tableau Dashboard provides data for our analysis.

 Tableau DA 4-3: Mini-Case, Computing and assigning overhead costs using activity-based costing LO P3

Chrom Company manufactures two models, the XL and RD. It also has two departments, assembly and finishing. The company wants to assign budgeted overhead costs to its two different models to better understand the profitability of each model. The Tableau Dashboard provides data for our analysis.

 

Tableau DA 4-3: Mini-Case, Computing overhead activity rates using ABC

1. Using activity based costing and data from the lower half of the dashboard, compute overhead activity rates for both maintenance and supervision

 

Tableau DA 4-3: Mini-Case, Assigning overhead costs and making decisions

2. Chrom produced 25,000 units of XL and 25,000 units of RD.  Each unit of the XL model used 2 direct labor hours and 1 machine hour. Each unit of the RD model used 3 direct labor hours and 3 machine hours.
(a) Compute the overhead cost per unit of each model using ABC.

(b) Alternatively, compute the overhead cost per unit of each model using a single plantwide overhead rate based on direct labor hours.
 
3. The company gives a bonus to production managers based on their ability to lower the cost of their assigned model.
a. Which overhead cost allocation method would the XL production manager prefer?
b. Which overhead cost allocation method would the RD production manager prefer?

Thanks