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Petral Ltd. Manufactures 2 products, W and 2 using the same factory and facilities. Details provided below: Product line Vol of Material Direct...

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I've already successfully completed the first 3 requirements, and I'm asking some helps for requirement 4)


here are the answer of the first three requirements


Required 1)

Verify the firm's plant-wide rate of $5.97 per machine hour. Show all relevant calculations. (2 marks)


Total o/h =$42725+$8725+$11725+$12725=$75 900

                           Total o/h cost                        

Plant wide rate= ¾¾¾¾¾¾¾¾¾¾ = $75 900/( 0.5´600+1.75´7100)= 5.97/ machine hour

                            Volumn of machine hours



 2) Compute all appropriate overhead rates using activity based costing. Round off all individual overhead rates to two decimal places. Show all relevant calculations. (2.8 marks)


Factory o/h rate= $42 725/ 12 725= 3.36/machine hour

Set-up cost rate= $8725/11= 793.18/ set-up

Cost of handling material rate= $11 725/16= 732.81 per machine handling

Administration cost for spare parts= $12 725/8= 1590.63 per spare part



3) Apply (1) and (2) to 2 product lines: that is, calculate the amount of overhead that should be allocated to Product-lines W and Z under the plant-wide rate and ABC rates. Show all relevant calculations. (4.8 marks)


 O/h applied Under plant-wide rate :

For W : 600´0.5DLH´$5.97=$ 1791

For Z : 7100´1.75MH´$5.97=$74177.35


O/h applied under ABC:

W: 3.36´0.5DLH´600+793.18´2+732.81´3+1590.63´3= $9564.68

 Z: 3.36´1.75´7100+793.18´9+732.81´13+1590.63´5=$60366.3



Please help me with question 4

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Q1. Petral Ltd. Manufactures 2 products, W and 2 using the same factory and facilities.
Details provided below: Product line Vol of Material Direct labour Machine time Labour cost
production (direct) cost per unit per unit per unit
per unit 600 $6 0.75 hour 0.5 hour I
7100 $18 1.25 hours 1.75 hours Production overhead is com rised of the followin costs: Description of cost Factory overhead related to machine
activity Set-up costs
Cost of handling materials Administration costs for spare parts The firm uses a plant-wide overhead rate based on Machine hours of $5.97 per
machine hour.

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However, an investigation of the activities (in addition to machine hours) that drive
costs at the product-line level revealed the following relationships: Product line No. of sat-ups No. of times No. of spare material was parts
handled Required: 1) Verify the fin'n's plant-wide rate of $5.97 per machine hour. Show all relevant
calculations. (2 marks) 2) Compute all appropriate overhead rates using activity based costing. Round off all individual overhead rates to two decimal places. Show all relevant calculations.
(2.8 marks) 3) Apply (1) and (2) to 2 product lines: that is, calculate the amount of overhead that
should be allocated to Product-lines W and Z under the plant-wide rate and ABC
rates. Show all relevant calculations. (4.8 marks) 4) Compare the overhead allocations to product lines W and 2. Clearly explain the differences in allocated costs with respect to each product line:
your explanation should first provide a theoretical explanation for the differences,
and second, explain these differences by refening back to the case facts provided. This part requires a narration that explains any figures calculated to highlight
differences in allocated amounts: students cannot just provide calculations without providing a detailed explanation. The marking criteria listed in the rubric provided

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