Pecot Industries has provided the following data from its activity-based costing
ID: 2340829 • Letter: P
Question
Pecot Industries has provided the following data from its activity-based costing system:
Activity Cost Pools
Est. Overhead Cost
Expected Activity
Assembly
$498,520
44,000
Machine hours
Processing orders
$54,263
1,100
Orders
Inspection
$77,589
1,110
Inspection hours
Data concerning Pecot’s product LB28 appears below:
Number of units produced 430
Machine hours 990
Number of orders 70
Inspection hours 20
Direct materials cost $37.74 per unit
Direct labor cost $10.45 per unit
Calculate the total unit product cost of LB28:
(Step 1: Determine activity rates for each activity pool
Step 2: Determine overhead costs charged to product LB28
Step 3: Add up all product costs for LB28
Step 4: Determine unit product cost)
Activity Cost Pools
Est. Overhead Cost
Expected Activity
Assembly
$498,520
44,000
Machine hours
Processing orders
$54,263
1,100
Orders
Inspection
$77,589
1,110
Inspection hours
Explanation / Answer
Note: Since there are no instructions provided in the question regarding rounding off, kindly refer to the notes mentioned after every step and round off as required.
Step 1:
Note: Activity rates are rounded off to 2 decimal places.
Step 2:
Note: Overhead costs charged to product LB28 are rounded off to the nearest whole dollar.
Step 3:
Note: Total product cost is rounded off to the nearest whole dollar.
Step 4:
Note: Unit product cost is rounded off to 2 decimal places.
Activity Cost Pools Est. Overhead Cost Expected Activity Activity Rate $ Assembly 498520 44000 11.33 Processing orders 54263 1100 49.33 Inspection 77589 1110 69.90Related Questions
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