Keeley Company makes products C and D. Information for overhead costs and for th
ID: 2461062 • Letter: K
Question
Keeley Company makes products C and D. Information for overhead costs and for the two products appears below. The company makes 50,000 units of product C each year and 20,000 units of Product D.
How much overhead would be assigned to each unit of Product C? A. $860,000 per unit B. $100 per unit C. $47 per unit D. $17.20 per unit
activity driver overhead cost prod c usage prod d usage setups # of setups 200000 500 setups 1500 setups ordering parts # of parts 300000 60000 parts 40000 parts machining machine hours 600000 12000 machine hours 6000 machine hours inspections # of inspections 400000 10000 inspections 40000 inspections shipping # of shipments 300000 10000 shipments 10000 shipments total overhead 1800000Explanation / Answer
Activity
Driver
Overhead Cost
Product C
Product D
Allocation Product C
Allocation Product D
Set ups
No of Set ups
200,000
500
1,500
50,000
150,000
Ordering Parts
No of Parts
300,000
60,000
40,000
180,000
120,000
machining
machine hrs
600,000
12,000
6,000
400,000
200,000
Inspection
No of inspections
400,000
10,000
40,000
80,000
320,000
Shipping
No of Shipments
300,000
10,000
10,000
150,000
150,000
Toal Overhead
1,800,000
860,000
940,000
No of Units
50,000
Cost per unit
17.20
Activity
Driver
Overhead Cost
Product C
Product D
Allocation Product C
Allocation Product D
Set ups
No of Set ups
200,000
500
1,500
50,000
150,000
Ordering Parts
No of Parts
300,000
60,000
40,000
180,000
120,000
machining
machine hrs
600,000
12,000
6,000
400,000
200,000
Inspection
No of inspections
400,000
10,000
40,000
80,000
320,000
Shipping
No of Shipments
300,000
10,000
10,000
150,000
150,000
Toal Overhead
1,800,000
860,000
940,000
No of Units
50,000
Cost per unit
17.20
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