Question

and XY Overd e located in the bo oded t o tested m o be the ones comended change to be con Allure Company manufactures and ABCs She has co Number of parts What is the total overhead perunt located to Product Muung activity based couting ABC 5136 $285 $2.55 O $235

Answer 1

Answer: $2.35 -->refer working note 1

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Working note 1 - Computation of overhead cost per unit
	M	XY
Total activity cost / overhead allocated        [Refer working note 2]             (a)	$260,850	$210,900
Production (In units)                                                                                        (b)	111,000	74,000
Overhead cost per unit                                                                               (a / b)	$2.35	$2.85

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Working note 2 - Allocation of overhead / activity cost
Activity	Activity Rate [Refer working note 3]		M			XY
			Activity usage		Overhead allocated	Activity usage		Overhead allocated
	(a)		(b)		(a x b)	(c)		(a x c)
Production setups	$4,500.00	per setup	6	setups	$27,000	14	setups	$63,000
Material handling	$600.00	per part	56	parts	$33,600	24	parts	$14,400
Packaging costs	$1.804054....	per unit	111,000	units	$200,250	74,000	units	$133,500
Total overhead allocated					$260,850			$210,900

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Working note 3 - Calculation of Activity rate
Activity	Budgeted activity cost (a)	Total Activity (b)		Activity rate (a / b)
Production setups	$90,000	20 [6 + 14]	setups	$4,500.00	per setup
Material handling	$48,000	80 [56 + 24]	parts	$600.00	per part
Packaging costs	$333,750	185,000 [111,000 + 74,000]	units	$1.804054... [Do not round up]	per unit