uring has five activity cost pools and two products (a budget tape vacuum and a

Question

uring has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Information is presented below Cost Drivers by Product sti Ordering and Machine Setup $130,000 297,000 400 Setups Machine hours Parts Inspections 1,000,000150,000 100,000 300,000 550 450 the overthead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. (Round overhead cost oer vnit to 2 places, e.g. 12.25 and cost assigned to o declmal places, e-g. 2,500.) per unit per unit

Explanation / Answer

Calculate overhead cost per unit :

Budget Deluxe Ordering and receiving (130 per order) 78000 52000 Machine setup (330 per setup) 165000 132000 Machining (4 per machine hour) 600000 400000 Assembly (0.8 per parts) 960000 640000 Inspection (30 per inspection) 165000 135000 Total overhead cost 1968000 1359000 Unit 700000 200000 Overhead cost per unit 2.81 6.80

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