Tri-bikes manufactures two different levels of bicycles: the Standard and the Extreme. The total overhead of $300,000 has traditionally been allocated by direct labor hours, with 150,000 hours for the Standard and 50,000 hours for the Extreme.

After analyzing and assigning costs to two cost pools, it was determined that machine hours is estimated to have $200,000 of overhead, with 4,000 hours used on the Standard product and 1,000 hours used on the Extreme product.

It was also estimated that the setup cost pool would have $100,000 of overhead, with 1,000 hours for the Standard and 1,500 hours for the Extreme.

A. What is the overhead rate per product under Traditional costing?

What is the overhead rate under Absorption Costing for:

B. The machine pool overhead rate

C. The setup pool overhead rate

Instructions are listed below.

Explanation:

Giving the following information:

Estimated costs and direct labor hours:

The total overhead= $300,000

Standard= 150,000 hours

Extreme= 50,000 hours

1) Under traditional costing, overhead gets allocated using a single plantwide manufacturing overhead rate.

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 300,000/200,000= $1.5 per direct labor hour

Now, we can allocate overhead to each product:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Standard= 1.5*150,000= $225,000

Extreme= 1.5*50,000= $75,000

2) Machine:

Overhead= $200,000

Hours= 4,000 hours used on the Standard product and 1,000 hours used on the Extreme product.

Estimated manufacturing overhead rate= 200,000/5,000= $40 per hour

3)Set up:

Overhead= $100,000

Hours= 1,000 hours for the Standard and 1,500 hours for the Extreme.

Estimated manufacturing overhead rate= 100,000/2,500= $40

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

answer; the above statement/question is ( true);