Question

Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and the regular. At the beginning of the year, the following data were prepared for this plant: Deluxe Regular Quantity 100,000 800,000 Selling price $900 $750 Unit prime cost $529 $483 In addition, the following information was provided so that overhead costs could be assigned to each product: Activity Name Activity Driver Deluxe Regular Activity Cost Setups Number of setups 300 200 $2,250,000 Machining Machine hours 100,000 300,000 80,000,000 Engineering Engineering hours 50,000 100,000 6,000,000 Packing Packing orders 100,000 400,000 450,000 Required: 1. Calculate the overhead rates for each activity. If required, carry your answers out to the nearest cent. Setups per setup Machining $ per machine hour Engineering per engineering hour Packing per packing order

Answer 1

1 calculation of Overhead rate of each activity: | Activity rate overhead cost o n nood Activity base. set up a $2,5000 store is set up = $2,250,000/6300+200) machining = $80,000,000/(100000 t, 300,000 = $4,500 per set up $200 per MH. Engineering s) $ 6,000,000/( 50,000T) = $40 pel EH. Packaging $450,000/(100,000+ 400,000) $0.9 per Packagin order.

2 calculation of per-unit product cost. I Particulars peune mintson Regular Pome costr ian $529 enitorizáver $48. set up. (300x $4500) $1,350,000 (200 x $450o). boli jo 900 machining [100000 $2001 $20,000,000 (30000ox $200 ] $60,000,000 Engineering og Csoooox $40] $2,000 POO C100000 *$40) DIA 4000000 Packing operpa ( 1OOCOOx $0.9). $ 90,000 ( 4oooox $0.9) $360,006 otal Activity cost $23, 440,000 sd $65,260,000 A) 800,000 se 82 Quantity (6 100,000 overhead cast (axb) $234. pel unt Add. Prime cost tout $529. OS Per unit cost $763 noasa $ 483 $565 1. Per unit cost / $763 $565

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