Chan Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: fast and standard. Activity Expected Costs Expected Activity Handling materials $ 690,000 230,000 parts Inspecting product 736,000 1,280 batches Processing purchase orders 170,000 1,360 orders Paying suppliers 240,000 640 invoices Insuring the factory 430,000 53,750 square feet Designing packaging 88,000 2 models
1. Compute a single plantwide overhead rate assuming that the company assigns overhead based on 110,000 budgeted direct labor hours.
2. In January 2017 the fast model required 3,500 direct labor hours and the standard model required 7,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.