Question

Do It! Review 17-2 Flynn Industries has three activity cost pools and two products. It expects to produce 2,820 units of Product BC113 and 1,270 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Flynn accumulated the following data relative to those activity cost pools and cost drivers. Annual Overhead Data Product AD908 Activity Cost Pools Machine setup Machining Packing Cost Drivers Setups Machine hours Estimated Overhead $20,938 86,717 30,464 Expected Use of Cost Drivers per Product Expected Use of Cost Product Drivers per Activity BC113 30 5,101 1,198 476 159 38 3,903 3 17 Orders Using the above data, do the following: Prepare a schedule showing the computations of the activity-based overhead rates per cost driver. Activity Cost Pools Estimated Overhead Expected Use of Cost Drivers per Activity Activity-Based Overhead Rates Machine setup setups per setup Machining machine hours per machine hr. Packing orders per order

Answer 1

Schedule showing the activity based overhead rates per cost Driver:

Activity cost pools Machine setup Machining Packing Estimated overhead 20938 86717 30464 Expected use of cost Drivers per activity 38 setups 5101 Machine hrs 476 Orders Activity-based overhead Rates 551 Per setup 17 Per Machine hr. 64 Per order

Schedule assigning each activity's overhead cost to the two products:

Activity cost pools Cost assigned BC 113 AD 908 Expected use of cost Activity based cost assigned Expected use of cost Activity based drivers per product overhead rates drivers per product overhead rates 30 551 1653018 551 1198 17 203663903 1 7 15964 10176 470721 Machine setup Machining Packing Total assigned costs 4408 66351 20288 91047

Overhead cost per unit for each Product:

• BC 113 = $47072 / 2820 units = $16.69 per unit.
• AD 908 = $91047 / 1270 units = $71.69 per unit.