Thornton Company has determined its activity cost pools and cost drivers to be t

Question

Thornton Company has determined its activity cost pools and cost drivers to be the following:

One product made by Thornton, metal casements, used the following activities during the period to produce 500 units:

(a) Calculate the cost per unit of activity for each activity cost pool for Thornton company.

(b) Calculate the manufacturing overhead cost per metal casement manufactured during the period. Round your answer to the nearest cent.
$Answer

Cost pools Setup $ 45,000 Material handling 9,600 Machine operation 180,000 Packing 54,000 Total indirect manufacturing costs $ 288,600 Cost drivers Setups 500 Material moves 600 Machine hours 18,000 Packing orders 1,200

Explanation / Answer

a Setup 90 =45000/500 Material handling 16 =9600/600 Machine operation 10 =180000/18000 Packing 45 =54000/1200 b Costs allocated: Setup 3600 =40*90 Material handling 1600 =100*16 Machine operation 21000 =2100*10 Packing 8100 =180*45 Total 34300 Units 500 Cost per metal casement 68.6

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