Riley Manufacturing has five activity cost pools and two products (a budget recl

Question

Riley Manufacturing has five activity cost pools and two products (a budget recliner and a deluxe recliner). Information is presented below:

Production is 750,000 units of Budget and 375,000 units of Deluxe. Riley Manufacturing uses activity-based costing.

Compute the overhead cost per unit for the Budget recliners to the nearest cent.

Cost Drivers By Product Activity Cost Pool Cost Driver Est. Overhead Budget Deluxe Ordering and Receiving Orders $150,000 400 600 Machine Setup Setups 341,000 300 800 Machining Machine Hours 1,100,000 200,000 350,000 Assembly Parts 1,600,000 1,800,000 1,400,000 Inspection Inspections 350,000 250 450

Explanation / Answer

Hi,

Please find the answer as follows:

Total Overhead Cost for the Budget recliners = 150000*400/(400 + 600) + 341000*300/(300 + 800) + 1100000*200000/(200000 + 350000) + 1600000*1800000/(1800000 + 1400000) + 350000*250/(250 + 450) = 1578000

Overhead Cost Per Unit for the Budget Recliners = 1578000/750000 = 2.104 or 2.10

Answer is 2.104 or 2.10

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.