Question

Flynn Industries has three activity cost pools and two products. It estimates production 2,000 units of Product BC113 and 1,000 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Flynn accumulated the following data relative to those activity cost pools and cost drivers. Annual Overhead Data Estimated Use of Cost Drivers per Product Activity Cost Pools Cost Drivers Estimated Overhead Estimated Use of Cost Drivers per Activity Product BC113 Product AD908 Machine setup Setups $26,400 44 26 18 Machining Machine hours 82,790 4,870 1,190 3,680 Packing Orders 34,170 510 170 340 Using the above data, do the following:

Prepare a schedule showing the computations of the activity-based overhead rates per cost driver. Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers per Activity Activity-Based Overhead Rates Machine setup $ setups $ per setup Machining machine hours $ per machine hr. Packing orders $ per order $ LINK TO TEXT

Prepare a schedule assigning each activity’s overhead cost to the two products. BC113 AD908 Activity Cost Pools Estimated Use of Cost Drivers per Product Activity-Based Overhead Rates Cost Assigned Estimated Use of Cost Drivers per Product Activity-Based Overhead Rates Cost Assigned Machine setup $ $ $ $ Machining $ $ Packing $ $ Total assigned costs $ $ LINK TO TEXT

Compute the overhead cost per unit for each product. (Round answers to 2 decimal places, e.g. 12.25.) BC113 AD908 Overhead cost per unit $ $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

Ans. 1	Activity cost pool	Estimated overhead (a)	Estimated use of cost		Activity based overhead
			drivers per activity (b)		rates   (a / b)
	Machine setup	$26,400	44	setups	$600.00	Per direct labor hour
	Machining	$82,790	4870	machine hours	$17.00	Per test
	Packing	$34,170	510	orders	$67.00	Per machine hour
	*Activity based overhead rates =   Estimated overhead / Estimated use of cost drivers per activity
Ans. 2		BC 113			AD 908
	Activity cost pool	Estimated use of cost	Activity based	Cost	Estimated use of cost	Activity based	Cost
		Drivers per product (a)	Overhead rates   (b)	Assigned (a*b)	Drivers per product (a)	Overhead rates   (b)	Assigned (a*b)
	Machine setup	26	$600	$15,600	18	$600	$10,800
	Machining	1190	$17	$20,230	3680	$17	$62,560
	Packing	170	$67	$11,390	340	$67	$22,780
	Total Assigned Cost			$47,220			$96,140
	*Cost assigned = Estimated use of cost drivers per product * Activity based overhead rates
Ans. 3	*Calculations of Overhead cost per unit :
		BC113	AD908
	Total Assigned Cost (a)	$47,220	$96,140
	Estimated production (b)	2000	1000
	Overhead cost per unit (a / b)	$23.61	$96.14
	*Overhead cost per unit = Total assigned cost / Estimated production