ollows Anticipated volume units Direct msterial cost Direct

ollows. Anticipated volume (units) Direct msterial cost Direct labor oost 60 140 540 25 25 The controliler, who is stubying the use of activity-basnd coing it\'s overhead can be identified with three activities: manufacturing setaps, machine processing and product shipping Data on the number of setups, machine hours wokedd ing shs,tbhe stivities the activities e respective cost drivers, follow. Setups Machine hours worked1,000 25,000 40,000 Out going shipments 60 40 100 120 80 200 The firm\'s total overhead of $3,060,000 is subdivided as olows manufacturingse i 5260,000, machine processing, $2,400,000 and product shipping 5400,000 Required A. Compute the pool rates that would be used for manufacturing setups, machine processing, and product shipping in an activity-based costing system. B. Assuming use of activity-based costing, compute the unit overhead costs of both product nos. 156 and 157 if the expected manufacturing volume is attained

Solution

A.

B.

Cost Pool	Overhead Costs $	Cost Driver	Pool Rates $
Manufacturing setups	260000	100	setups	2600	per setup
Machine processing	2400000	40000	machine hours	60	per machine hour
Product shipping	400000	200	no. of shipments	2000	per shipment
	3060000