Question

Process Activity Components Changeover Machining Setups Quantity 830 8,470 40 Finishing Welding Inspecting Rework Overhead Cost Driver $456,000 Number of batches 306,000 Machine hours 226,000 Number of setups $988,000 $194,000 Welding hours 223,000 Number of inspections 64,500 Rework orders $481,500 $133,000 Purchase orders 35,000 Number of units 67,000 Number of units $235,000 6,500 845 200 Support Purchasing Providing space Providing utilities 507 5,210 5,210 Additional production information concerning its two product lines follows. Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders Model 145 2,100 2,400 415 465 3,150 Model 212 3, 110 4,100 415 380 5,320 20 100 169 20 100 338

Answer 1

Department Departmental Overhead Cost (A) $ 988,000 $ 481,500 $ 235,000 Departmental Overhead Activity (B) Overhead Rate (A/B) 8470 Machine hours $ 116.65 6500 Welding hours $ 74.08 507 No. of purchase orders $ 463.51 Components Finishing Support Model 415 Activity Driver Departmental OH Rate Total Overhead Cost 3150 $ 2400 $ 338 $ Components Finishing Support Total Overhead Cost assigned No. of Units produced Overhead cost per unit 116.65 $ 74.08 $ 463.51 $ $ 367,438 177,785 156,667 701,889 2100 334.23 $ Model 212 Activity Driver Total Departmental OH Rate. Overhead Cost 5320 $ 4100 $ 169 $ 116.65 74.08 463.51 Components Finishing Support Total Overhead Cost assigned No. of Units produced Overhead cost per unit $ $ $ $ 620,562 303,715 78,333 1,002,611 3110 322.38 $

Computation of Total Cost per Unit Material & Labour per Unit Overhead cost per Unit Total Cost PerUnit Model 415 $ 260.00 $ 334.23 $ 594.23 $ $ $ Model 212 150.00 322.38 472.38 Computation of Profit (Loss) Price per Unit Less Cost per Unit Profit (Loss) per Unit Model 415 Model 212 $ 800.00 $ $ (594.23) $ $ 205.77 $ 270.00 (472.38) (202.38)