Data Table Activity Cost Allocation Base Setup Machine maint

Data Table Activity Cost Allocation Base Setup Machine maintenance Total indirect manufacturing costs 51,000 Number of setups 42,000 93,000 Number of machine hours Direct labor hours Number of setups Number of machine hours Lo-Gain 1,800 10 3,900 Hi-Gain 4,200 10 2,100 Total 6,000 20 6,000 Print Done

Solution

Estimated predetermined overhead rate traditional = 93000/6000 = $15.50 per direct labor hour Lo-Gain HI-Gain Total indirect costs allocated 27900 65100 (15.5 x 1800; 15.5 x 4200) Number of units 250 175 Indirect cost per unit $ 111.60 $                                                          372.00 Estimated Overhead cost / Estimated qty of the allocation base = predetermined allocation rate Setup 51000 / 20 = 2550 machine Maintenance 42000 / 6000 = 7 Lo-Gain HI-Gain Setup 25500 25500 (2550 x 10; 2550 x 10) machine Maintenance 27300 14700 (7 x 3900; 7 x 2100) Total activity based cost 52800 40200 Number of units 250 175 Activity based cost per unit $                                           211.20 $ 229.71