Fischer Company Identified the Following Activities, Costs, and Activity Drivers

question 48

Essay

Fischer Company identified the following activities, costs, and activity drivers:
$\begin{array}{|l|c|c|}\hline \text { Activity } & \text { Expected Costs } & \text { Expected Activity } \\\hline \text { Handling parts } & \$ 425,000 & 25,000 \text { parts in stock } \\\hline \text { Inspecting product } & \$ 390,000 & 940 \text { batches } \\\hline \text { Processing purchase orders } & \$ 220,000 & 440 \text { orders } \\\hline \text { Designing packaging } & \$ 230,000 & 5 \text { models } \\\hline\end{array}$ a.Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals).
b.Compute separate rates for each of the four activities using the activity based costing.

---

Definitions:

Writing Checks

The act of completing a check by specifying the date, payee, and amount, and signing it, to instruct a bank to transfer funds.

Adjusted Cash Balance

The cash balance reported in a company's financial statement, modified for factors like outstanding checks or deposits in transit.

Bank Statement

A monthly or quarterly document provided by a bank summarizing the transactions, including deposits and withdrawals, that occurred in a specific account.

Service Charge

A fee collected to pay for services related to the primary product or service being purchased.