Problem:
Flynn Industries has three activity cost pools and two products. It expects to produce 3,000 units of Product BC113 and 1,500 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Flynn accumulated the following data relative to those activity cost pools and cost drivers.
|
|
Estimated
|
Expected Use of Cost
|
Product
|
Product
|
|
Activity Cost Pool
|
Cost Drivers
|
Overhead
|
Drivers per Activity
|
BC113
|
AD908
|
|
Machine setup
|
Setups
|
$16,000
|
40
|
25
|
15
|
|
Machining
|
Machine hours
|
110,000
|
5,000
|
1,000
|
4,000
|
|
Packing
|
Orders
|
30,000
|
500
|
150
|
350
|
Using the above data, do the following:
(a) Prepare a schedule showing the computations of the activity-based overhead rates per cost driver.
(b) Prepare a schedule assigning each activity's overhead cost to the two products.
(c) Compute the overhead cost per unit for each product. (Round to nearest cent.)
(d) Comment on the comparative overhead cost per product.