Question

TB Problem Qu. 4-209 Daba Company manufactures two products, Product F... Daba Company manufactures two products, Product F and Product G. The company expects to produce and ser000 F and 1.700 units of Product G during the current year. The company uses activity based costing to compute uni external reports. Data relating to the company's three activity cost pools are given below for the current year: of Product s for t Expected Activity Activity Cost Pool Machine setups Purchase orders Order Bike Estimated Overhead Cost $14, 300 $84.480 $24,800 Product 132 setups 896 order 1,290 hours Product G 88 wetups 1, 664 order 1, 190 hours Total 220 Setup 2.560 Orders 2,480 hours Required: Using the activity based costing approach, determine the overhead cost per unit for each product. (Roundy places.) w ers to 2 decimal Product F $ 39.27 Product G $ 72.53 Overhead cost per una

Answer 1

Question 4 - 209

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	Product F	Product G
Overhead Cost Per Unit           [Refer working note 1]	$39.27	$42.67

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Working note 1 - Computation of overhead cost per unit
	Product F	Product G
Total activity cost / overhead allocated        [Refer working note 2]             (a)	$51,048	$72,532
Production (In units)                                                                                        (b)	1,300	1,700
Overhead cost per unit                                                                               (a / b)	$39.27	$42.67

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Working note 2 - Allocation of overhead / activity cost
Activity	Activity Rate [Refer working note 3]		Product F			Product G
			Activity usage		Allocation of activity cost	Activity usage		Allocation of activity cost
	(a)		(b)		(a x b)	(c)		(a x c)
Machine setups	$65	per setup	132	setups	$8,580	88	setups	$5,720
Purchase orders	$33	per order	896	orders	$29,568	1,664	orders	$54,912
Order size	$10	#REF!	1,290	hours	$12,900	1,190	hours	$11,900
Total overhead assigned					$51,048			$72,532

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Working note 3 - Calculation of Activity rate
Activity	Budgeted activity cost (a)	Total Activity (b)		Activity rate (a / b)
Machine setups	$14,300	220	setups	$65	per setup
Purchase orders	$84,480	2,560	orders	$33	per order
Order size	$24,800	2,480	hours	$10	per hour

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Question 4 - 228

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	Product K52W	Product X94T
Total overhead Cost           [Refer working note]	$11,866.30	$7,021.77

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Working note - Allocation of overhead cost
Activity	Activity Rate		Product F			Product G
			Activity usage		Allocation of activity cost	Activity usage		Allocation of activity cost
	(a)		(b)		(a x b)	(c)		(a x c)
Setting up batches	$72.02	per batch	67	batches	$4,825.34	54	batches	$3,889.08
Processing customer orders	$29.08	per customer order	47	customer orders	$1,366.76	32	customer orders	$930.56
Assembly products	$13.51	per assembly hour	420	assembly hours	$5,674.20	163	assembly hours	$2,202.13
Total overhead assigned					$11,866.30			$7,021.77