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Whispering Winds Industries manufactures dining chairs and tables. The following information is available regarding the two products and their estimated use of cost drivers: Dining Chairs Tables Estimated Cost Machine setups 285 685 $49,470 Inspections 335 555 $73,870 Labor hours 2,600 2,400 Whispering Winds is considering switching from one overhead rate based on labor hours to ABC. Perform the following analysis for these two components of overhead: (a) Compute total machine setups and inspection costs assigned to each product, using a single overhead rate. (Round overhead rate value to 3 decimal places, e.g. 52.711 and final answers to 0 decimal places, e.g. 5,275.)

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Answer and Explanation:

a. The calculation of the total machine setups and inspection costs assigned to each product is given below:

Single overhead rate is

= ($49,470 + $73,870) ÷ (2,600 + 2,400)

= $24.668

Now the dining chairs cost is

= $24.668 ×2,600

=$ 64,137

And, for tables, it is

= $24.668 × 2,400

= $59,203

hence, the same should be considered

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