Question

Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving and inspection Information on these activities and their drivers is given below. Basic Advanced Total Units produced 150,000 450,000 Prime costs $10,500,000 $45,000,000 $55,500,000 Machine hours 150,000 750,000 900,000 Engineering hours 200 1,800 2,000 Receiving orders 300 900 Inspection hours 900 1,800 2,700 1.200 $9,900,000 Overhead costs: Machining Engineering Receiving Inspecting products 980,000 300,000 513,000

Answer 1

					Basic	Advance	Basic	Advance
		Total Activity	Overhead cost	Rate per Activity	Total Activity	Total Activity	Overhead cost	Overhead cost
	Machine Hours	900000	9,900,000	11	150000	750000	1650000	8250000
	Enginerring hours	2000	980,000	490	200	1800	98000	882000
	Receiving orders	1200	300,000	250	300	900	75000	225000
	inspection hours	2700	513,000	190	900	1800	171000	342000
			11,693,000				1994000	9699000
		Basic	Advance
	Prime Cost	10500000	45000000
ADD	Overhead Cost	1994000	9699000			`
	Total Cost	12494000	54699000
DIVIDE	No of Units	150000	450000
	Unit Cost Per unit	83.29	121.55
		Basic	Advance
	Overhead Cost	1994000	9699000
DIVIDE	No of Units	150000	450000
	Overhead Cost Per unit	13.29	21.55
	Based on Consumption	Basic	Advance	Total
	Inpection Activity Hours	900	1800	2700
	Inspection Cost	171000	342000	513000