Q1) Hutchings Company produces and distributes two products, A and K. Overhead costs are presently assigned using number of units produced as allocation base. Controller has changing to activity-based costing ABC. system. She has gathered 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. Compute the overhead cost per unit under present system?
B. Determine the total overhead assigned to each product using present system?
C. What would be total overhead assigned to each product under ABC costing?
D. What would be overhead cost per unit under ABC costing?