Answer:
Deluxe= $4.25 per book
Moderate= $4.25 per book
Economy= $4.25 per book
Explanation:
Giving the following information:
Activity (Cost) Cost Driver Delux Moderate Economy
Machine maintenance ($330,000) machine hours 250 750 1,000
Setups ($630,000)
Packing ($166,000)
Photo development ($574,000)
First, we need to calculate the total overhead cost:
Total overhead= 330,000 + 630,000 + 166,000 + 574,000= 1,700,000
Now, we can calculate the estimated manufacturing overhead rate to allocate overhead to each book type.
The allocation base is machine-hours.
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 1,700,000/ 2,000= $850 per machine hour.
Now, we can allocate overhead to each book:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Deluxe= $850*250hours= $212,500
Moderate= $850*750hours= $637,500
Economy= $850*1,000= $850,000
Based on the number of units, we can calculate the unitary overhead:
Deluxe= $212,500/50,000= $4.25 per book
Moderate= $637,500/150,000= $4.25 per book
Economy= $850,000/200,000= $4.25 per book
