Answer:
Calculation of cost driver rates
Material receipts = $249,975/750 = $333.30 per requisition
Machine set-up = $150,000/200 set-ups = $750.00 per set-up
Assembly = $450,000/300 parts = $1,500 per part
Machine maintenance = $175,000/3,500 hours = $50 per machine hour
Calculation of overhead allocated to each unit of products
Material receipts
Simple = <u>$333.30 x 300</u>
369,991 units
= $0.27 per unit
Removable = <u>$333.33 x 450</u>
146,100 units
= $1.03 per unit
Machine set-up
Simple = <u>$750 x 150 set-ups</u>
369,991 units
= $0.30 per unit
Removable = <u>$750 x 50 set-ups</u>
146,100 units
= $0.26
Assembly
Simple = <u>$1,500 x 100 parts
</u>
369,991 units
= $0.41 per unit
Removable = <u>$1,500 x 200 parts
</u>
146,100 units
= $2.05 per unit
Machine maintenance
Simple = <u>$50 x 2,000</u> machine hours
369,991 units
= $0.27 per unit
Removable = <u>$50 x 1,500</u> machine hours
146,100 units
= $0.51 per unit
Calculation of overhead allocated to each product
Simple Removable
$ $
Material receipts 0.27 1.03
Machine set-up 0.30 0.26
Assembly 0.41 2.05
Machine maintenance <u>0.27 </u> <u> 0.51</u>
Overhead allocated <u> 1.25 </u> <u>3.85</u>
Explanation:
The overhead allocation rate is calculated by dividing the overhead for each cost pool by the total cost driver for each cost pool.
The overhead allocated to each product is calculated by multiplying the cost driver rate by the cost driver for each product divided by the number of units of each product.
