Question

Question 1 Swifty Industries has three activity cost pools and two products. It estimates production 2,000 units of Product BC113 and 1,000 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Swifty accumulated the following data relative to those activity cost pools and cost drivers. Annual Overhead Data Estimated Use of Cost Drivers per Product Cost Drivers Estimated Use of Cost Product Drivers per Activity BC113 Product AD908 Activity Cost Pools Machine setup Machining Packing 15 Estimated Overhead $17,500 120,750 28,670 Setups Machine hours 35 4,830 470 20 1,140 3,690 Orders 120 350 Using the above data, do the following:

Answer 1

Activity cost pools	Estimated overhead	Estimated use of cost driver per activity	Activity-based overhead rates
Machine setup	$17,500	35 setups	$500 per setup
Machining	120,750	4,830 machine hours	25 per machine hour
Packing	28,670	470 orders	61 per order
	$166,920

	BC113			AD908
Activity cost pools	Estimated use of cost driver per product	Activity-based overhead rates	Cost assigned	Estimated use of cost driver per product	Activity-based overhead rates	Cost assigned
Machine setup	20	$500	$10,000	15	$500	$7,500
Machining	1,140	25	28,500	3,690	25	92,250
Packing	120	61	7,320	350	61	21,350
Total assigned cost			$45,820			$121,100

	BC113	AD908
Overhead cost per unit	$22.91 ($45,820/2,000)	$121.1 ($121,100/1,000)