Question

Petitte Corporation has provided the following data from its activity-based costing system:

Activity Cost Pool	Total cost		Total activity
Assembly	$612,560	31,000		machine hours
Processing orders	$35,451	1,300		orders
Inspection	$100,217	1,690		Inspection hours

Data concerning the company's product K54A appear below:

Selling price	$150 per unit
Annual production and sales	410 units
Annual machine hours	700 machine hours
Annual number of orders	30 orders
Annual inspection hours	30 orders
Direct materials cost	$45.67 per unit
Direct labor cost	$31.24 per unit

1. Compute the activity rates for each activity cost pool.

2. Compute the overhead cost charged to Product K54A.

3. Compute the unit cost of product K54A.

Answer 1

Answer:-1)-

Petitle Corporation
Schedule showing the activity based overheads per cost driver
Activity cost pool	Estimated overhead (a)	Expected use of cost drivers per activity (b)	Activity based overhead rates (c=a/b)
	$
Assembly	612560	31000 machine hours	19.76
Processing orders	35451	1300 orders	27.27
Inspection	100217	1690 Inspection hours	59.3
	748228

2)-

Petitle Corporation
Total overhead cost charged to Product K54A
Particulars		Amount
		$
Direct material costs	$45.67 per unit*410 units	18724.70
Direct labor costs	$31.24 per unit*410 units	12808.40
Assembly	$19.76 per hour*700 hours	13832
Processing orders	$27.27 per order*30 orders	818.10
Inspection costs	$59.30 per hour*30 hours	1779
Totak overhead costs		47962.2

3)-

Unit cost of product K45A= $47962.20/410 units =$116.98 per unit