Question

Problem 3-16A Part 2 2. Management is considering using activity-based costing to assign manufacturing overhead cost to products. The activity-based costing system would have the following four activity cost pools: Activity Cost Pool Activity Measure Estimated Overhead Cost Maintaining parts inventory Number of part types $ 225,000 Processing purchase orders Number of purchase orders 182,000 Quality control Number of tests run 45,000 Machine-related Machine-hours 460,000 $ 912,000 Expected Activity Activity Measure LEC 40 LEC 90 Total Number of part types 600 900 1,500 Number of purchase orders 2,000 800 2,800 Number of tests run 500 1,750 2,250 Machine-hours 1,600 8,400 10,000 Determine the activity rate for each of the four activity cost pools. (Round your answers to 2 decimal places.) ReferenceseBook & Resources WorksheetDifficulty: 3 HardLearning Objective: 03-03 Compute product costs using activity-based costing. Problem 3-16A Part 2Learning Objective: 03-02 Compute activity rates for an activity-based costing system.Learning Objective: 03-04 Contrast the product costs computed under activity-based costing and conventional costing methods. Check my work 3.value: 1.00 pointsRequired information Problem 3-16A Part 3 3. Using the activity rates you computed in part (2) above, do the following: a. Determine the per unit amount of manufacturing overhead cost that would be assigned to each product using the activity-based costing system. (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Compute the unit product cost of each product. (Do not round intermediate calculations. Round your final answers to 2 decimal places)

Answer 1

Activity cost pool		Estimated overhead cost
Maintaining parts	No. of parts types	$225,000
Processing purchase order	No. of purchase order	$182,000
Quality Control	No. of test runs	45000
Machine related	Machine hours	460000
		$912,000
	LEC 40	LEC 90	Total
No. of parts types	600	900	1500
No. of purchase order	2000	800	2800
No. of test runs	500	1750	2250
Machine hours	1600	8400	10000
Computation of Activity rates
Activity cost pool	Estimated overhead cost E		Activity driver A	Activity rate E/A
Maintaining parts	$225,000	No. of parts types	1500	$150
Processing purchase order	$182,000	No. of purchase order	2800	$65
Quality Control	45000	No. of test runs	2250	$20
Machine related	460000	Machine hours	10000	$46
	$912,000
Comutation of manufacturing overhead allocated to products
		LEC 40		LEC 90
Activity cost pool	Activity rate E/A	Activty M	Cost allocated R*M	Activty N	Cost allocated R*N
Maintaining parts	150	600	90000	900	135000
Processing purchase order	65	2000	130000	800	52000
Quality Control	20	500	10000	1750	35000
Machine related	46	1600	73600	8400	386400
		Total manufacturing overhead	303600		608400
As per the information activity arte ans allocation can be calculated