Question

Flynn Industries has three activity cost pools and two products. It expects to produce 3,170 units of Product BC113 and 1,250 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Flynn accumulated the following data relative to those activity cost pools and cost drivers. Expected Use of Annual Overhead Data Cost Drivers per Product Estimated Cost Pools Cost Drivers Overhead $20,709 80,656 33,741 Expected Use of Cost Product Product Drivers Activity BC113 AD908 Machine setup Machining Packing Setups Machine hours Orders 39 5,041 489 25 1,164 182 14 3,877 307 Using the above data, do the following: Prepare a schedule showing the computations of the activity-based overhead rates per cost driver Activity Cost Estimated Overhead Expected Use of Cost Activity-Based Overhcad Rates Pools Drivers per Activ Machine setup s Machining Packing setups per setup per machine hr per order machine hours $ orders By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor

Answer 1

Solution:

Computation of activity rates
Activity	Estimated Overhead Cost	Activity Base	Usage of Activity Base	Activity Rate
						Machine setup	$20,709.00	Setups	39	$531.00	Per Setup
Machining	$80,656.00	Machine hours	5041	$16.00	Per Machine hour
Packing	$33,741.00	Orders	489	$69.00	Per order
Total	$135,106.00

Assignment of overhead to Products
Activity cost pools	BC 113			AD908
	Expected use of cost drivers per product	Activity based overhead rates	Cost assigned	Expected use of cost drivers per product	Activity based overhead rates	Cost assigned
Machine setup	25	$531.00	$13,275.00	14	$531.00	$7,434.00
Machining	1164	$16.00	$18,624.00	3877	$16.00	$62,032.00
Packing	182	$69.00	$12,558.00	307	$69.00	$21,183.00
Total			$44,457.00			$90,649.00

Computation of overhead cost per unit
Particulars	BC113	AD908
Overhead assigned	$44,457.00	$90,649.00
Nos of units	3170	1250
Overhead per unit	$14.02	$72.52