Question

Goodwin Co, manufactures two products: R and W. The company uses activity-based costing to apply manufacturing overhead costs to products. The cost pools and related estimated overhead costs for 20x3 are as follows: Activity Cost Activity measure Overhead cost Pool Assembly Number of direct labour $33289 hours Inspection Number of inspections 153569 Product support Number of engineers 247332 The expected activity measures for the manufacturing of product R in 20x3 are: 135 direct labour hours, 4548 inspections, and 2 engineer(s). The expected activity measures for the manufacturing of product Win 20x3 are: 511 direct labour hours, 7265 inspections, and 3 engineers If the company estimates that it will produce 13626 units of product R in 20x3. what is the manufacturing overhead per unit that would be applied to product R for the year? Select one: a. $6.66 b. $19.75 $12.11 d. $31.86

Answer 1

Correct answer----------(b) $19.75

Working

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Assembly	Number of Direct labor hour	$        33,289.00	511	$             65.14	Per Direct labor hour
Inspection	Number of inspection	$     153,569.00	7265	$             21.14	Per inspection
Product support	Number of engineers	$     247,332.00	3	$    82,444.00	Per engineers

.

Cost assigned to Product R
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Assembly	$           65.14	135.00	$           8,794.55
Inspection	$           21.14	4,548.00	$         96,136.52
Product support	$ 82,444.00	2.00	$      164,888.00
Total Overheads assigned			$      269,819.07
Production			13,626.00
Overhead cost per unit			$ 19.80

The exact answer is due to round off.