Question

Daba Company manufactures two products, Product F and Product G. The company expects to produce and sell 2,800 units of Product F and 3,200 units of Product G during the current year. The company uses activity-based costing to compute unit product costs for external reports. Data relating to the company's three activity cost pools are given below for the current year:

	Estimated		Expected Activity
Activity Cost Pool	Overhead Cost		Product F		Product G		Total
Machine setups	$	17,600	132	setups	88	setups	220	setups
Purchase orders	$	107,520	784	orders	1,456	orders	2,240	orders
Order size	$	62,000	1,290	hours	1,190	hours	2,480	hours

Required:

Using the activity-based costing approach, determine the overhead cost per unit for each product. (Round your answers to 2 decimal places.)

Answer 1

Product F Activity driver Overhead Estimated overhead cost (A) Activity Product G Activity Overhead driver Assigned incurred Activity Rate (A/B) Expected Activity (B) incurred Assigned Machine setups $ 17,600 Purchase orders $ 107,520 Order size $ 62,000 220 No. of setups $ 2240 No. of orders $ 2480 No. of hours $ 80.00 48.00 25.00 132 $ 10,560 784 $ 37,632 1290 $ 32,250 88 $ 7,040 1456 $ 69,888 1190 $ 29,750 $ 80,442 $ 106,678 Total Overhead Cost Total Units Produced Overhead Cost per Unit 2800 3200 $ 28.73 $ 33.34 Overhead assigned = Actvity driver incurred * Activity Rate Overhead cost per Unit = Total Overhead cost / Units produced