A Company Has Two Products: a and B

Essay

A company has two products: A and B. It uses a plantwide overhead allocation method based on activity 2 and has prepared the following analysis showing budgeted costs and activities.Use this information to compute (a)the company's plantwide overhead rate and (b)the amount of overhead allocated to Product A.
$\begin{array}{r}\text { Budgeted Activity }\quad\quad\quad\\\begin{array} { | l | c | r | r | r | } \hline & & { } \\ { \text { Activity Cost Pool } } & { \begin{array} { c } \text { Budgeted } \\\text { Overhead Cost }\end{array} } & \text { Product A } & \text { Product B } & { \text { Total } } \\\hline \text { Activity 1 } & \$ 160,000 & 400 & 1,600 & 2,000 \\\hline \text { Activity 2 } & \$ 110,000 & 2,000 & 1,000 & 3,000 \\\hline \text { Activity 3 } & \$ 180,000 & 1,200 & 10,800 & 12,000 \\\hline & & { } \\\hline \begin{array} { l } \text { Total budgeted } \\\text { overhead }\end{array} & \$ 450,000 & { } \\\hline\end{array}\end{array}$