Question

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 $ $

Answer 1

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).