Question

Flynn Industries has three activity cost pools and two products. It expects to produce 2,200 units of Product BC113 and 1,430 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 Expected Use of Cost Drivers per Product
Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Drivers per Activity Product BC113 Product AD908
Machine setup Setups $19,608 38 21 17
Machining Machine hours 123,650 4,945 1,122 3,824
Packing Orders 33,530 479 192 287
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 Expected Use of Cost Drivers per Activity Activity-Based Overhead Rates
Machine setup $_______ _______setups $_____ per setup
Machining ________ _______machine hours $_____ per machine hr.
Packing ________ _______orders 192 287
$______
Prepare a schedule assigning each activity's overhead cost to the two products.
BC113 AD908
Activity Cost Pools Expected Use of Cost Drivers per Product Activity-Based Overhead Cost Assigned Expected Use of Cost Drivers per Product Activity-Based Overhead Rates Cost Assigned
Machine setup $ $ $ $
Machining $ $
Packing $ $
Total assigned $ $
Compute the overhead cost per unit for each product. Round answers to 2 decimal places.
BC113 AD908
Overhead cost per unit

Answer 1

Answer:

Results are below.

Explanation:

First, we need to calculate the allocation rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Machine setup= 19,608 / 38= $516 per set up

Machining= 123,650 / 4,945= $25 per machine hour

Packing= 33,530 / 479= $70 per  order

Now, we can allocate to each product:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Product BC113:

Machine setup= 516*21= $10,836

Machining= 25*1,122= $28,050

Packing= 70*192= $13,440

Total= $52,326

Product AD908:

Machine setup= 516*17= $8,772

Machining= 25*3,824= $95,600

Packing= 70*287= $20,090

Total= $124,462

Finally, the unitary cost:

Product BC113= 52,326 / 2,200= $28,79

Product AD908= 124,462 / 1,430= $87.04