Question

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. Model Annual Sales in Units High F 10,000 Great P 16,000 National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows: High F Great P Direct materials $ 38.00 $ 25.40 Direct labor $ 17.52 $ 13.14 Budget factory overhead: Engineering and Design 2,409 engineering hours $ 404,712 Quality Control 12,848 inspection hours 269,808 Machinery 33,726 machine hours 539,616 Miscellaneous Overhead 26,400 direct labor hours 134,904 Total $ 1,349,040 National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities: High F Great P Engineering and design hours 969 1,440 Quality control inspection hours 5,648 7,200 Machine hours 20,286 13,440 Labor hours 12,000 14,400 Using activity-based costing, total overhead per unit of the High F model is:

Answer 1

Answer:

$66.73

Explanation:

Activity                                Overhead Cost   Activity Base  Activity Rate

Engineering and Design      $404,712              2,409                 $168

Quality Control                     $269,808             12,848                $21

Machinery                             $539,616              33,726               $16

Miscellaneous Overhead     $134,904              26,400              $5.11

High F

Activity                                Base-Usage   Activity Rate   Activity Cost

Engineering and Design         969                  $168             $162,792

Quality Control                        5,648                $21               $118,608

Machinery                              20,286               $16               $324,576

Miscellaneous Overhead      20,286               $5.11             $61,320

Total Overhead cost                                                              $667,296

Produced units                                                                         10,000

Per unit overhead cost                                                           $66.73