Question

Clearly I am needing help

Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go- karts: Deluxe and Basic. Activity Handling materials Inspecting product Processing purchase orders Paying suppliers Insuring the factory Designing packaging Expected Costs $ 655,000 930,000 135,000 205,000 330,000 105,000 Expected Activity 100,000 parts 1,500 batches 700 orders 500 invoices 40,000 square feet 2 models Assume that the following information is available for the company's two products for the first quarter of this year. Production volume Parts required Batches made Purchase orders Invoices Space occupied Models Deluxe Model 10,000 units 20,000 parts 250 batches 50 orders 50 invoices 10,000 sq. ft. 1 model Basic Model 30,000 units 30,000 parts 100 batches 20 orders 10 invoices 7,000 sq. ft 1 model Required: Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate and average OH cost per unit answers to 2 decimal places.) -

Answer 1

Calculation of Activity Rates :-

Activity	Expected Costs (A)	Expected Activity (B)	Activity Rate (A/B)
Handling Materials	$655000	100000 parts	$6.55 per part
Inspecting Product	$930000	1500 batchs	$620 per batch
Processing Purchase orders	$135000	700 orders	$192.86 per order
Paying Suppliers	$205000	500 invoices	$410 per invoice
Insuring The Factory	$330000	40000 square feet	$8.25 per square feet
Designing Packaging	$105000	2 models	$52500 per model

Calculation of Overhead Cost per unit of Deluxe Model :-

Activity	Activity Rate (A)	Cost Driver Quantity Incurred (B)	Overhead Allocated (A*B)
Handling Materials	$6.55 per part	20000 parts	$131000
Inspecting Product	$620 per batch	250 batchs	$155000
Processing Purchase orders	$192.86 per order	50 orders	$9643
Paying Suppliers	$410 per invoice	50 invoices	$20500
Insuring The Factory	$8.25 per square feet	10000 sq. ft.	$82500
Designing Packaging	$52500 per model	1 model	$52500
Total (C)			$451143
Production Volume (D)			10000 units
Overhead Cost Per Unit (C/D)			$45.11 per unit

Calculation of Overhead Cost per unit of Basic Model :-

Activity	Activity Rate (A)	Cost Driver Quantity Incurred (B)	Overhead Allocated (A*B)
Handling Materials	$6.55 per part	30000 parts	$196500
Inspecting Product	$620 per batch	100 batchs	$62000
Processing Purchase orders	$192.86 per order	20 orders	$3857.20
Paying Suppliers	$410 per invoice	10 invoices	$4100
Insuring The Factory	$8.25 per square feet	7000 sq. ft.	$57750
Designing Packaging	$52500 per model	1 model	$52500
Total (C)			$376707.20
Production Volume (D)			30000 units
Overhead Cost Per Unit (C/D)			$12.56 per unit

"Please Rate The Answer"