Answer:
Tulsa Medical Supply Company
1. Calculation of the unit cost of a production order for 100 specially coated plates used in cancer testing:
Direct materials $120 * 100 plates = $12,000
Direct labor 40 * 100 plates = 4,000
Overhead:
Machine setups $2,000 * 3 setups $6,000
Material handling $2 * 900 pounds 1,800
Hazardous control $5 * 300 pounds 1,500
Quality control $75 * 3 inspections 225
Other overheads $10 * 50 machine hours 500
Total overheads applied $10,025
Total manufacturing cost for 100 plates $26,025
Unit cost = $26,025/100 = $260.25 per plate
Explanation:
a) Data and Calculations:
Activity Cost Pool Budgeted Cost Driver Budgeted Level for
Overhead Cost Cost Driver Pool Rate
Machine setups $ 250,000 Number of setups 125 $ 2,000 per setup
Material handling 75,000 Weight of raw material 37,500 lb. $2 per pound
Hazardous waste control 25,000 Weight of hazardous chemicals used 5,000 lb. $ 5 per pound
Quality control 75,000 Number of inspections 1,000 $ 75 per inspection
Other overhead costs 200,000 Machine hours 20,000 $ 10 per machine hour
Total $ 625,000
