Question

Adity a nd Activity and Product Casting Hammer Company produces a variety of ectronicament. One of its parts product the end
In addition, the following information was provided so that overhead costs could be assigned to each product Activity Name Ac
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Answer #1

Requirement 1

Activity rate
Setups $       3,700.00 Per setup
Machining $          100.00 Per machine hour
Engineering $             60.00 Per engineering hour
Packing $               0.40 Per packing order

Requirement 2

Deluxe $                  670.50 per unit
Regular $                  529.13 per unit

Working

Calculation of Activity rates
Activity Cost Pool Activity driver Overhead Cost (A) Expected Activity (B) Activity rate (A/B)
Setups Number of setup $ 1,850,000 500 $       3,700.00 Per setup
Machining Number of machine hour $ 40,000,000 400000 $          100.00 Per machine hour
Engineering Number of engineering hour $ 9,000,000 150000 $             60.00 Per engineering hour
Packing Number of packing order $ 200,000 500000 $               0.40 Per packing order

.

Cost assigned to Deluxe
Activity name Activity Rates Activity ABC Cost
(A) (B) (A x B)
Setups $     3,700.00                      300.00 $ 1,110,000
Machining $        100.00              100,000.00 $ 10,000,000
Engineering $           60.00                50,000.00 $ 3,000,000
Packing $             0.40              100,000.00 $ 40,000
Total Overheads assigned $ 14150000.,0
Production           100,000.00
Overhead cost per unit $ 141.50

.

Cost assigned to Regular
Activity name Activity Rates Activity ABC Cost
(A) (B) (A x B)
Setups $     3,700.00 200 $ 740,000
Machining $        100.00 300000 $ 30,000,000
Engineering $           60.00 100000 $ 6,000,000
Packing $             0.40 400000 $ 160,000
Total Overheads assigned $ 36,900,000
Production           800,000.00
Overhead cost per unit $               46.13

.

ABC Costing
Deluxe Regular
Prime cost $                  529.00 $                   483.00
Overheads $                  141.50 $                     46.13
Total Cost per unit $                  670.50 $                   529.13
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