ollows. Anticipated volume (units) Direct msterial cost Direct labor oost 60 140

Question

ollows. Anticipated volume (units) Direct msterial cost Direct labor oost 60 140 540 25 25 The controliler, who is stubying the use of activity-basnd coing it's overhead can be identified with three activities: manufacturing setaps, machine processing and product shipping Data on the number of setups, machine hours wokedd ing shs,tbhe stivities the activities e respective cost drivers, follow. Setups Machine hours worked1,000 25,000 40,000 Out going shipments 60 40 100 120 80 200 The firm's total overhead of $3,060,000 is subdivided as olows manufacturingse i 5260,000, machine processing, $2,400,000 and product shipping 5400,000 Required A. Compute the pool rates that would be used for manufacturing setups, machine processing, and product shipping in an activity-based costing system. B. Assuming use of activity-based costing, compute the unit overhead costs of both product nos. 156 and 157 if the expected manufacturing volume is attained

Explanation / Answer

A.

B.

Cost Pool Overhead Costs $ Cost Driver Pool Rates $ Manufacturing setups 260000 100 setups 2600 per setup Machine processing 2400000 40000 machine hours 60 per machine hour Product shipping 400000 200 no. of shipments 2000 per shipment 3060000

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