Question

In: Accounting

Daston Company manufactures two products, Product F and Product G. The company expects to produce and...

Daston Company manufactures two products, Product F and Product G. The company expects to produce and sell 1,910 units of Product F and 2,430 units of Product G during the current year. Data relating to the company’s three activity cost pools are given below for the current year:

Total Activity
Activity Cost Pools Total Cost Product F Product G Total
Machine setups $ 35,682 160 setups 153 setups 313 setups
Purchase orders $ 248,880 950 orders 1,490 orders 2,440 orders
Order size $ 102,900 3,000 hours 3,860 hours 6,860 hours

Required:

Using the activity-based costing approach, determine the overhead cost per unit for each product. (Round your answers to 2 decimal places.)

  

            Product F            Product G
  Total Overhead cost $ $

Solutions

Expert Solution

Overhead cost/activity=Total cost/Total activity

Hence overhead cost for:

Setups=35682/313=$114/setup

Orders=248880/2440=$102/order

Hours=102900/6860=$15/hour

Total cost allocated to:

F=(114*160)+(102*950)+(15*3000)=$160140

G=(114*153)+(102*1490)+(15*3860)=$227322

F G
Total overhead cost 160140 227322
Overhead cost/unit (160140/1910)=$83.84(Approx) (227322/2430)=$93.55(Approx).

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