Question

1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product. (Click the icon to view the data.) Compute the manufacturing cost per unit for each product. How might Neylon's managers use the new cost information from its activity-based costing system to better manage its business? 2. Total manufacturing overhead costs are: 3. Total Machining costs 360,000 Data Table Setup costs 108,000 Inspection costs 117,000 Mathematical Financial Requirement 1. Choose a cost driver for each overhead cost pool and calculate the manufa Annual production in units 45,000 90,000 Begin by choosing a cost driver for each overhead cost pool. Direct materials cost 2$ 180,000 $ 360,000 Activity Cost driver Rate Direct manufacturing labor cost 90,000 $ 180,000 Machining 9,000 Direct manufacturing labor-hours 4,500 Set up 60,000 Machine-hours 30,000 Number of production runs Inspection 45 45 Inspection hours 1,200 600 Print Done

Answer 1

H 1. Choosing cost driver for each owerhead cost pool Activity Rate. isco Overhead driven Machining Machine hours 360,000 3D,ODD + 60,000 4 pex machine hour. Setup Production sun 10 8000 45 +45 = 1200 per produtionsun Inspection Ingpeution bours to 117000 1200 + 600 = 65 per Inspection bour

2. Manufacturing Queshead cost per unit each produit. Machining cost Mathematical Financial $ 4 x 30, DOOMI 4X6D,ODD 120,000 240.000 Setup Lost 1200 X 45 54000 1200X45 5 40vo Inspection cost 1200 X $65 78000 600 x $65 39000 Total Overhead cost 252000 333000 45,000 90,000 Divide by number of ca unite anufacturing ouerhood Cost per unit med 5.6 3.7

22 Manufacturing cost per unit for each produt Mathematical financial 190,0 DO ost 360,00D Direct material Direct Labour cost 90, DOO | 180,000 Overhead wst 25 2000 333,000 Toral manufacturing Lost 522,000 522,000 1 873000 of 45000 90,000 Divide by number units 11.6 9.7 Cost per unit (3) Activity based costing helps the manager to understand the costs incurred on various activities in the above question machining setup & inspection) & identify the areas where heavy costs are in uurred & thus helps to take measures to control those wsk

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