Alphabet Company manufactures two products, Product F and Product G. The co prod

Question

Alphabet Company manufactures two products, Product F and Product G. The co produce and sell 3,300 units of Product F and 3,700 units of Product G during the company uses activity-based costing to compute unit product costs for external rep the company's three activity cost pools are given below for the current year: Estimated Expected Activity Activity Cost Pool Overhead Cost Product F Product G Total Machine setups 20,400 144 setups 96 setups 240 setups Purchase orders 129,320 854 orders 1,586 orders 2,440 orders General factory 75,600 1,310 hours 1,210 hours 2,520 hours Required: Using the activity-based costing approach, compute the activity rate for each activity then determine total overhead cost per unit for each product. Show all work to earn credit.

Explanation / Answer

Calculation of activity rate Activity cost pools Estimated overhead(a) Estimated cost driver(b) activity rates((a)/(b)) Machine setup 20400 240 setups 85.00 Purchase orders 129320 2440 orders 53.00 General factory 75600 2520 hours 30.00 ` Product F Product G Activity cost pools Expected use of cost drivers per product(a) activity Based overhead rates(b) cost assigned(a*b)(in$) Expected use of cost drivers per product(c) activity Based overhead rates(d) cost assigned(c*d)(in$) Machine setup 144 setups 85.00 12240 96 setups 85.00 8160 Purchase orders 854 orders 53.00 45262 1586 orders 53.00 84058 General factory 1310 hours 30.00 39300 1210 hours 30.00 36300 Total overhead cost 96802 128518 Units 3300 3700 Total overhead cost per unit (Total overhead cost/ units) 29.33 34.73

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