13. Bark Mode, Incorporated produces and distributes two types of security syste

Question

13. Bark Mode, Incorporated produces and distributes two types of security systems, Standard and Deluxe. Budgeted cost and activity for each of its three activity cost pools are shown below. The company plans to produce and sell 120,000 standard units and 80,000 deluxe units. Budgeted Activity Deluxe Activity Cost Poo Budgeted Packaging Material handling Standard Cost $100,000 120,000 finished 80,000 finished units units $49.600 600,000 total arts 640,000 total parts S120,000 6 total setups Production setups 14 total setups (a.) Compute the approximate overhead cost per unit of standard under activity-based costing. (b.) Compute the approximate overhead cost per unit of deluxe under activity-based costing.

Explanation / Answer

Calculate overhead cost per unit :

Standard Deluxe Packaging (100000/200000*120000) = 60000 40000 Material handling (49600/1240000*600000) = 24000 25600 Production setups (120000/20*6)=36000 84000 Total overhead cost 120000 149600 Units 120000 80000 Overhead cost per unit 1 1.87

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