Question

Daba Company manufactures two products, Product F and Product G. The company expects to produce and sell 1,400 units of Product F and 1,800 units of Product G during the current year. The company uses activity-based costing to compute unit product costs for external reports. Data relating to the company's three activity cost pools are given below for the current year:

	Estimated		Expected Activity
Activity Cost Pool	Overhead Cost		Product F		Product G		Total
Machine setups	$	13,200	120	setups	80	setups	200	setups
Purchase orders	$	85,680	882	orders	1,638	orders	2,520	orders
Order size	$	26,840	1,270	hours	1,170	hours	2,440	hours

Required:

Using the activity-based costing approach, determine the overhead cost per unit for each product. (Round your answers to 2 decimal places.)

Answer 1

Answer: Calculation of Activity Rate: Activity Cost Pool Machine Setups Purchase Orders Order Size Estimated Overhead Cost 13,200 85,680 26,840 Estimated Activity 200 Setups 2,520 Orders 2,440 Hours Activity Rate 66 per Setup 34 per Order 11 per Hour Calculation of Overhead Cost charged to Products and Overhead Cost per Unit Product F Product G Total Activity: Machine Setups 7,920 5,280 13,200 Purchase Orders 29,988 55,692 85,680 Order Size 13,970 12,870 26,840 Total Overhead Costs 51,878 73,842 125,720 Units Produced 14,400 1,800 Product Margin 3.60 41.02