Question

National Inc, manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders, Model High F Great P Annual Sales in Units 12,800 17,000 National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows: Direct materials Direct labor High F $40.ee $19.60 Great P $27.40 $15.20 Budget factory overhead: Engineering and Design Quality Control Machinery Miscellaneous Overhead Total 2,888 engineering hours 13,230 inspection hours 34, 110 machine hours 26,790 direct labor hours $ 420, eee 326,eee 610,560 133,eee $1,489,560

Answer 1

Correct answer------------$62.09

Working

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Engineering and design	Number of Engineering hour	$ 420,000	2800	$          150.00	Per Engineering hour
Quality control	Number of Engineering hour	$ 326,000	13230	$             24.64	Per Engineering hour
Machinery	Number of machine hour	$ 610,560	34110	$             17.90	Per machine hour
Miscellanious overhead	Number of Direct labor hour	$ 133,000	26790	$               4.96	Per Direct labor hour

.

Cost assigned to High F
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Engineering and design	$        150.00	1,160.00	$ 174000.00
Quality control	$           24.64	5,840.00	$ 143903.25
Machinery	$           17.90	20,480.00	$ 366586.60
Miscellanious overhead	$             4.96	12,200.00	$ 60,567.38
Total Overheads assigned			$           745,057.22
Production			12,000.00
Overhead cost per unit			$ 62.09