Question

The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers. Activity cost Pool Rachine setups Material handling Hazardous waste control Quality control Other overhead costs Budgeted Overhead Cost Cost Driver $250,00 Number of setups 75,eee weight of raw material 25,00 Weight of hazardous chemicals used 75, ce Number of inspections 200,00 Machine hours $625. Budgeted Level for Cost Driver 125 37.500 lb. 5.000 lb. 1.000 20.000 5 Pool Rate $2,000 per setup 2 per pound 5 per pound $ 75 per inspection $ 10 per sachine hour Total Required: 1. Calculate the unit cost of a production order for 100 specially coated plates used in cancer testing. In addition to direct material costing $120 per plate and direct labor costing $40 per plate, the order requires the following: (Round Intermediate calculations and final answer to 2 decimal places.) Machine setups a terial Hazardous materiais Ottons < Prev 5. 5

Answer 1

Unit cost     [Refer working note 1]

$260.25

per plate

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Working note 1 - Calculation of unit cost
Direct material per unit                                                           (a)	$120.00
Direct labor per unit                                                                (b)	$40.00
Overhead costs assigned per unit    [Refer working note 2]     (c)	$100.25
Unit cost                                                                                (a + b + c)	$260.25

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Working note 2 - Computation of overhead Cost per unit
Overhead allocated        [Refer working note 3]       (a)	$10,025
Number of units                                                          (b)	100
Overhead cost per unit                                           (a / b)	$100.25

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Working note 3 - Allocation of overhead using pool rates:
Activity cost pool	Pool Rate		Activity		Allocation
	(a)		(b)		(a x b)
Machine Setup	$2,000.00	per setup	3	setups	$6,000
Materials handling	$2.00	per pound	900	pounds	$1,800
Hazardous waste control	$5.00	per pound	300	pounds	$1,500
Quality control	$75.00	per inspection	3	inspections	$225
Other overhead costs	$10.00	per machine hour	50	machine hours	$500
Overhead assigned					$10,025

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