Exercise- Hayward Industries manufactures dining chairs and tables. The following information is available:
| Dining Chairs |
Tables |
Total Cost |
| Machine setups |
200 |
600 |
$48,000 |
| Inspections |
250 |
470 |
$72,000 |
| Labor hours |
2,600 |
2,400 |
Hayward is considering switching from one overhead rate based on labor hours to activity-based costing.
Perform the following analyses for these two components of overhead:
Compute total machine setups and inspection costs assigned to each product, using a single overhead rate.
Compute total machine setups and inspection costs assigned to each product, using activity-based costing.