Hi I was wondering if you could help me answer this question? I’m a bit stuck.
The question is attached and the questions are below:
a) Calculate total overhead that should be assigned to each of the two production
orders, Compact wallet and Long wallet. (6 marks)
b) Calculate the overhead cost per wallet in each order. (1 mark)
c) Assume that the plant used a single plant-wide predetermined overhead rate
based on direct labour. The direct labour budget is 4 000 hours. Calculate:
(i) the predetermined overhead rate per direct labour hour; (0.5 mark)
(ii) the total overhead cost that would be assigned to the order for the Compact
wallet and the order for the Long wallet; (1 mark)
(iii) the overhead cost per wallet in each order. (1 mark)
d) Explain the limitations of activity-based costing.
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