Question

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers: Overhead Costs Pool Quality control Machine operation Materials handling Miscellaneous overhead cost Cost Driver Number of inspections Machine hours Number of batches Direct labor hours Overhead Cost $ 90,000 156,000 1,200 64,000 Budgeted Level for Cost Driver 1,500 1,500 40 4,000 Sheen Co. has an order for 1,000 laser printers that has the following production requirements: 200 Number of inspections Machine hours Number of batches Direct labor hours 255 5 800
51.47 is the 5th option

Answer 1

calculation of overhead cost per driver :

overhead cost pool	cost driver	overhead cost	budget level of cost driver	overhead cost per driver
quality control	no. of inspection	$90000	1500	$90000/1500 = $60
machine operations	machine hours	$156000	1500	$156000/1500 = $104
material holdings	no. of batches	$1200	40	$1200/40 = $30
misc. overhead cost	direct labor hours	$64000	4000	$64000/4000 =$16

calculation of total overhead cost of 1000 laser printers :

cost drivers	production requirement	overheadd cost per driver	total overhead cost
no. of inspection	200	$60	200 x $60 = $12000
machine hours	255	$104	255 x $104 = 26520
no. of batches	5	$30	5 x $30 =$150
direct labor hours	800	$16	800 x $16 = $12800
total overhead costs			$51470

total overhead cost per unit = total overhead cost/no. of units = $51470/100 laser printers = $51.47 per laser printer

as per my calculations correct answer must be $51.47 which is not available in options.

please make sure given options are complete or missing or correct.

thank you

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