Exercise 4-9 Activities Cost Drivers Total Cost $41,000 29,795 25,725 $96,520 Co
ID: 2407086 • Letter: E
Question
Exercise 4-9
Activities
Cost Drivers
Total Cost
$41,000
29,795
25,725
$96,520
Cost Drivers
Instruments
Gauges
Total
Overhead Rate
Instruments
Gauges
Exercise 4-9
Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 52 range instruments and 296 pressure gauges were produced, and overhead costs of $96,520 were estimated. An analysis of estimated overhead costs reveals the following activities.Activities
Cost Drivers
Total Cost
1. Materials handling Number of requisitions$41,000
2. Machine setups Number of setups29,795
3. Quality inspections Number of inspections25,725
$96,520
The cost driver volume for each product was as follows.
Cost Drivers
Instruments
Gauges
Total
Number of requisitions 375 650 1,025 Number of setups 175 330 505 Number of inspections 240 285 525Explanation / Answer
Calculate overhead rate :
Calculate overhead cost assigned and overhead cost per unit ;
Overhead rate Material handling (41000/1025) 40 per requisition Machine setup (29795/505) 59 per setup Quality inspection (25725/525) 49 per inspectionRelated Questions
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