Question

8. Dangerfield Enterprises produces three kinds of golf clubs: Fancy, Light, and Disco. These unique clubs incur overhead costs during production. The manager at Dangerfield Enterprises examined the overhead costs and determined the cost drivers for each cost object.

ABC level	Overhead cost	Cost driver	Fancy	Light	Disco
Unit	$400,000	Number of units	2,300	2,500	3,200
Batch	$600,000	Number of set-ups	30	50	70
Product	$400,000	Percent of usage	30%	25%	45%
Facility	$800,000	Square feet	120,000	160,000	220,000

Using activity based costing, fill in the amount of overhead that is allocated to each product:

	Fancy	Light	Disco
Unit Level:
Batch Level:
Product Level:
Facility Level:

Show work here please !!!!

Answer 1

Calculation of amount of overhead located:
	Fancy	Light	Disco
Unit level	115000	125000	160000
(400000*0.2875, 400000*0.3125, 400000*0.40)
Batch Level	120000	200000	280000
(600000*0.20, 600000*50/150, 600000*70/150)
Product Level	120000	100000	180000
(400000*0.30, 400000*0.25, 400000*0.45)
Facility level	192000	256000	352000
(800000*0.24, 800000*0.32, 800000*0.44)
Working:
Unit Level:
Total units= 2300+2500+3200= 8000
Fancy= 2300/8000= 0.2875
Light= 2500/8000=0.3125
Disco= 3200/8000= 0.40
Batch Level:
Total set up= 30+50+70= 150
Fancy= 30/150= 0.20
Light= 50/150
Disco= 70/150
Facility Level:
Total squarefeet= 120000+160000+220000= 500000
Fancy= 120000/500000= 0.24
Light= 160000/500000= 0.32
Disco=220000/500000=0.44