Question

Exercise 4-9 a-b (Video) Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 200 pressure gauges were produced, and overhead costs of $87,970 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Cost Drivers Total Cost 1. Materials handling 2. Machine setups 3. Quality inspections Number of requisitions Number of setups Number of inspections $37,800 28,320 21,850 $87,970 The cost driver volume for each product was as follows Cost Drivers Instruments Gauges Total Number of requisitions Number of setups Number of inspections 405 190 230 645 1,050 290 245 480 475 Determine the overhead rate for each activity Overhead Rate Materials handling Machine setups Quality inspections per requisition per setup LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Assign the manufacturing overhead costs for April to the two products using activity-based costing. (Round per unit answers to 2 decimal places, e.g. 12.25.) Instruments Gauges Total cost assigned Overhead cost per Unit

Answer 1

Answers

• Overhead rates

	Total Cost	Total Driver	Overhead rates = ANSWERS
Machine handling	$37,800	1,050	$36	per requisition
Machine Setup	$28,320	480	$59	per setup
Quality Inspections	$21,850	475	$46	per inspection
	$87,970

--Working

	Instruments			Gauges
Activity Cost Pool	Estimated use of cost drivers	Activity based overhead rates	Cost assigned	Estimated use of cost drivers	Activity based overhead rates	Cost assigned
Machine handling	405	$36	$14,580	645	$36	$23,220
Machine Setup	190	$59	$11,210	290	$59	$17,110
Quality Inspections	230	$46	$10,580	245	$46	$11,270
Total Assigned Cost = ANSWERS			$36,370			$51,600

--Remaining answers

	Instruments	Gauges
Total Cost assigned = ANSWERS [calculated above]	$36,370	$51,600
Estimated units	50	200
Overhead cost per unit	$                727.40	$               258.00