Question

Question 2 Randel Manufacturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Information is presented below: Activity Cost Pool Ordering and Receiving Machine Setup Cost Driver Orders Setups Machine hours Parts Inspections Estimated Overhead $130,000 297,000 1,000,000 1,600,000 300,000 Cost Drivers by Product Budget Deluxe 600 400 500 400 150,000 100,000 1,200,000 800,000 550 450 Machining Assembly Inspection Compute the overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. (Round overhead cost per unit to 2 decimal places, e.g. 12.25 and cost assigned to o decimal places, e.g. 2,500.) Overhead cost per unit Budget per unit Deluxe per unit Click if you would like to Show Work for this question: Open Show Work

Answer 1

Ans.	Overhead cost per unit
	Budget	$2.81
	Deluxe	$6.80
	*WORKING NOTES:
	*Calculation of Total activity :
	Activity cost pool	Cost driver	Budget (a)	Deluxe (b)	Total activity (a+b)
	Ordering and receiving	Orders	600	400	1000
	Machine setup	Setups	500	400	900
	Machining	Machine hours	150000	100000	250000
	Assembly	Parts	1200000	800000	2000000
	Inspection	Inspections	550	450	1000
	*Calculation of Activity rate :
	Activity cost pool	Estimated overhead (a)	Total activity (b)	Activity rate (a/b)
	Ordering and receiving	$130,000	1000	$130.00
	Machine setup	$297,000	900	$330.00
	Machining	$1,000,000	250000	$4.00
	Assembly	$1,600,000	2000000	$0.80
	Inspection	$300,000	1000	$300.00
	*Calculations for overhead cost assigned:
			Cost drivers by product		Overhead cost assigned
	Activity cost pool	Activity rate	Budget (a)	Deluxe (b)	Budget (a)	Deluxe (b)
	Ordering and receiving	$130.00	600	400	$78,000	$52,000
	Machine setup	$330.00	500	400	$165,000	$132,000
	Machining	$4.00	150000	100000	$600,000	$400,000
	Assembly	$0.80	1200000	800000	$960,000	$640,000
	Inspection	$300.00	550	450	$165,000	$135,000
	Total Overhead Cost Assigned				$1,968,000	$1,359,000
	*Calculations of Overhead cost per unit :
		Budget	Deluxe
	Total overhead cost assigned	$1,968,000	$1,359,000
	Production	700000	200000
	Overhead cost per unit	$2.81	$6.80