Question

*Do It! Review 5-14

Weber Industries has three activity cost pools and two products. It expects to produce 3,000 units of Product BC113 and 1,400 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Weber accumulated the following data relative to those activity cost pools and cost drivers. Annual Overhead Data Expected Use of Cost Drivers per Product Activity Cost Pool Cost Drivers Estimated Overhead Expected Use of Cost Drivers per Activity Product BC113 Product AD908 Machine set-up Set-ups $ 18,870 41 26 15 Machining Machine hours 110,700 4,970 994 3,976 Packing Orders 30,620 520 156 364

Prepare a schedule showing the calculations of the activity-based overhead rates per cost driver. (Round rates per cost driver to 2 decimal places, e.g. 15.25.) Cost Pool Estimated MOH Estimated Usage Rate Machine set-up $ $ per set-up Machining $ $ per machine hr. Packing $ $ per order

Prepare a schedule assigning each activity’s overhead cost to the two products. (Round answers to 0 decimal places, e.g. 1,525.) Assignment of overhead: BC113 AD908 Machine set-up $ $ Machining $ $ Packing $ $ Overhead assigned $ $

Calculate the overhead cost per unit for each product. (Round answers to 2 decimal places, e.g. 15.25.) BC113 AD908 Overhead cost per unit $ $

Answer 1

1 Cost Pool Cost Calculation of Activity Rates based on Cost driver E stimated Estimated Rate MOH Usage $ 18,870 41 $ 460.24 per set-up $ 1,10,700 4970 $ 22.27 per machine hr. $ 30,620 5 20 $ 58.88 per order Machine set-up Machining Packing Working Note: | Cost Pool Machine set-up Machining Packing Calulation $ 18,870 / 41 $110,700/4970 $30,620/520 Rate Activity Rate 460.24 per set-up 22.27 Iper machine hr. 58.88 per order $ $ BC113 AD908 Assignment of overhead: Machine set-up Machining Packing Overhead assigned $ $ $ 11,966 $ 22,140 $ 9,186 $ 6,904 88,560 21,434 $ 43,292 $ 1,16,898 Working Note: Allocation of Overhead cost to each Product Activity BC113 AD908 Machine set-up Machining Packing Overhead assigned (26* $ 460.24 ) (994 *$22.27) (156*$58.88) $ $ $ 11,966 (15 * $ 460.24 ) 22,140 (3976 *$22.27) 9,186 (364*$58.88) $ $ $ $ 6,904 88,560 21,434 $ 43,292 1,16,898 BC113 AD908 Overhead cost per unit $ 14.43 $ 83.50 Working Note: BC113 AD908 Total Overhead Assigned $ 43,292 $ 3000 1,16,898 1400 Number of Unit Overhead Cost per unit 14.43 $ 83.50 Overhead Cost per unit=Total Overhead Assigned / No. of units