Calculation of overhead cost per unit, total overhead allocated to each product using traditional costing system and ABC costing system.
Hutchings Company manufactures and distributes two products, A and K. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has changing to an activity-based costing ABC. system. She has collected the following information:
|
Activity
|
Cost Driver
|
Amount
|
A
|
K
|
|
Production setups
|
Number of setups
|
$164,000
|
16
|
24
|
|
Material Handling
|
Number of parts
|
96,000
|
112
|
48
|
|
Packaging costs
|
Number of units
|
260,000
|
160,000
|
100,000
|
|
|
|
$520,000
|
|
|
A. What is the overhead cost per unit under the current system?
B. What is the total overhead allocated to each product using the current system?
C. What would be the total overhead allocated to each product under ABC costing?
D. What would be the overhead cost per unit under ABC costing?