Jones Manufacturing Company Makes Two Products

Essay

Jones Manufacturing Company makes two products.The company's budget includes $500,000 of overhead.In the past,the company allocated overhead based on estimated total direct labor hours of 20,000.Jones recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: processed purchase orders,machine setups,and good shipped.The following is a summary of company information:
Required:
a.Calculate the company's overhead rate based on total direct hours.
b.Calculate the company's overhead rates using the activity-based costing pools.
Unit 7-2,