Clover Manufacturing Company Makes Two Products

Essay

Clover Manufacturing Company makes two products.The company's budget includes $200,000 of overhead.Using the traditional allocation method,the company has allocated overhead based on estimated total direct labor cost of $125,000.Clover recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: cutting,machine setups,and good shipped.The following is a summary of company information:
Required:
a.Calculate the company's overhead rate as a percentage of direct labor cost.
b.Calculate the company's overhead rates using the activity-based costing pools.
Unit 7-2,