Question

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Fontillas Instrument, Inc. manufactures twa praducts: missile range instruments and space pressure gauges. During April, it produced 50 range instruments and 200 pressure gauges and incurred estimated overhead costs of $94,220. An analysis of estimated overhead costs reveals the follawing activities: Activities Total Cost Cost Drivers 1. Materlal handling Number of requisitions $34,980 2. Machine set-ups Number of set-ups 28,420 Number of inspections 3. Quality inspections 30,820 $94,220 The cost driver volume far cach product was as follows: Instruments Gauges Cost Drivers Total Number of requisitions 400 660 1,060 Number of set-ups 180 310 490 Number of inspections 270 670 400 Determine the overhead rate for each activity The overhead rates are: Activity Cost Pool Rate Material handling per requisition s Machine set-ups per set-up Inspections per inspection s LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Assign the manufacturing overhead costs for April to the two products using activity-based costing. Instruments Gauges Overhead cost per unit s

Answer 1

Determine the Activity rate for each activity pool Activity rate Cost pool/ Total Cost pool total Activt Activity Materila Handling Machine Setup Quality Inspection Activity rate-Cost pool/ Activity 34980 1060 33 28420 490 58 30820 670 46 Instruments Gauges OH allocated = Activy *rateActivity OH allocated Activity Rate Activity = Activy *rate Materila Handling Machine Setup Quality Inspection 400 660 21780 33 13200 58 180 17980 10440 310 270 400 46 12420 18400 Total verehead Cost 58160 36060 Cost Per unit, 50,200 721.20 290.80

Answers Activity Cost pool Materila Handling Machine Setup Quality Inspection Overehead Rate 33 Per Requisition 58 Per Setup 46 Per Inspection Answers Instruments Gauges Overhead Cost per unit 290.80 721.20