Question

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.

Model	Annual Sales in Units
High F	11,000
Great P	17,000

National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:

	High F			Great P
Direct materials	$	39.00		$	26.40
Direct labor	$	18.60		$	14.20

Budget factory overhead:
Engineering and Design	2,600	engineering hours	$	468,000
Quality Control	13,030	inspection hours		310,560
Machinery	33,910	machine hours		574,940
Miscellaneous Overhead	26,590	direct labor hours		185,500
Total			$	1,539,000

National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:

	High F	Great P
Engineering and design hours	1,060	1,540
Quality control inspection hours	5,740	7,290
Machine hours	20,380	13,530
Labor hours	12,100	14,490

Using activity-based costing, total overhead per unit of the High F model is: (Rounded to the nearest cent.)

Answer 1

Calculate overhead per unit of High F model

	High F
Engineering and Design	468000/2600*1060 = 190800
Quality Control	310560/13030*5740 = 136808
Machinery	574940/33910*20380 = 345540
Miscellaneous overhead	185500/26590*12100 = 84413
Total overhead	757561
Unit	11000
Overhead per unit	68.87