Question

Sander Company produces mathematical and financial calculators and operates at capacity. Data related to the two products follows. Requirements 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for ea product. E (Click the icon to view the data.) 2. Compute the manufacturing cost per unit for each product. Total manufacturing overhead costs are: 3. How might Sander's managers use the new cost information from its activity-based costing system to better manage its business? Total Machining costs 360,000 2$ Setup costs 108,000 Inspection costs 117.000 $ 1,200 per production run Production runs Set up Inspection-hours 65 per inspection-hour Inspection Determine the formula to calculate the overhead allocated to each product. Data Table Indirect-cost rate Product quantity of allocation base Overhead allocated to product = х Now calculate the total overhead allocated to each product and the overhead cost per unit. (Round your answer to the nearest cent.) Mathematical Financial Mathematical Annual production in units 90,000 45,000 Machining costs 360,000 Direct materials cost 2$ 180,000 $ Setup costs 180,000 Direct manufacturing labor cost 90,000 $ Inspection costs Direct manufacturing labor-hours 4,500 9,000 Total overhead costs Machine-hours 30,000 60,000 Number of production runs 45 45 Inspection hours 1,200 600 Manufacturing overhead cost per unit Choose from any list or enter any number in the input fields and then click Check Answer. Print Done

Answer 1

1)	Activity Driver Rate
	Activity	Total Overhead Cost	Total Number Of Activities	Activity Driver rate
	Machining	$                                       3,60,000	90000 Machine Hours	4	Per machine hour
	Setup	$                                       1,08,000	90 production runs	1200	per production run
	Inspection	$                                       1,17,000	1800 inspections	65	per inspection
	Overhead allocated to each product.
	Mathematical
		Activity Rate	Number of activity	Overhead Cost
	Machining Cost	4	30000	$                   1,20,000
	Setup Cost	1200	45	$                      54,000
	Inspections Cost	65	1200	$                      78,000
	Total Overhead Cost			$                   2,52,000
	Number of units produced			45000
	Overhead Cost Per unit			$                           5.60
	Financial
		Activity Rate	Number of activity	Overhead Cost
	Machining Cost	4	60000	$                   2,40,000
	Setup Cost	1200	45	$                      54,000
	Inspections Cost	65	600	$                      39,000
	Total Overhead Cost			$                   3,33,000
	Number of units produced			90000
	Overhead Cost Per unit			$                           3.70
2)	Manufacturing Cost Per Unit
			Mathematical	Financial
		Direct Material	$                       1,80,000	$                   3,60,000
		Labor Cost	$                           90,000	$                   1,80,000
		Overhead Cost	$                       2,52,000	$                   3,33,000
		Total Manufacturing cost	$                       5,22,000	$                   8,73,000
		Number of units produced	45000	90000
		Manufacturing Cost per unit	$                             11.60	$                           9.70
3)	Activity-based costing gives a better analysis of costing which are useful for making a crucial business decision
	such as pricing decisions, make or outsourced.