Question

5. XYZ Company produces a variety of bicycles. One of its plants produces two bicycles: a Mountain model and a Racing Model. At the beginning of the year, the following data were MOUNTAIN RACING Quantity 250 125 Unit Prime cost 40 50 In addition, the following information was provided so that overhead costs could be assigned to each product: Activity Name Mountain Activity Driver Activity Cost RACING Machining Machine hours $2,000 250 250 Engineering Engineering hours $4,000 750 500 Packaging Packaging orders $8,750 500 1,250 XYZ Company uses Activity base costing to calculate product costs. REQURIED: Use the above information to prepare a schedule that shows the allocation of costs to each product and the unit cost per each product.

Answer 1

Answer

	Mountain	Racing
Prime Cost	$ 10,000.00	$     6,250.00
Overheads	$     5,900.00	$     8,850.00
Total cost	$ 15,900.00	$ 15,100.00
Units	250.00	125.00
Cost per unit	$          63.60	$        120.80

Calculations:

		Cost Activity		Overheads
Activity Name	Activity Cost	Mountain	RACING	Mountain	RACING
Machining	$            2,000	250	250	$    1,000	$    1,000
Engineering	$            4,000	750	500	$    2,400	$    1,600
Packaging	$            8,750	500	1,250	$    2,500	$    6,250
				$    5,900	$    8,850

In case of any doubt, please comment.