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Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two prodRequired: a. Compute the unit costs for the two products V-1 and V-2 using the current costing system at Upriver (using machi

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Answer #1

a) overhead rate per machine hour = total overhead cost / total machine hours

= 68,400 / 12,000

= 5.7 per machine hour

Product machine hour Overhead rate Total overhrad unit cost
V 1 10,000 5.7 57,000 5.7
V 2 2,000 5.7 11,400 5.7

b) ABC

Activity cost pool overhead activity Allocation rate V 1 V2
Machine depreciation 36,000 machine hour 3 10,000 x 3 = 30,000 2,000 x 3 = 6,000
Setup labour 18,000 production run 150 80 x 150 = 12,000 40 x 150 = 6,000
Material handling 14,400 % of material cost 60% 20,000 x 60% = 12,000 4,000 x 60% = 2,400
Total 54,000 14,400
Unit cost 5.4 14.4

> The allocation rate is the answers for part b of the first question and you need to add the unit cost with the direct materials cost for the second question.

Nic J. Wed, Nov 10, 2021 5:11 PM

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