Madolfo Ltd. manufactures two products. Following is a production and cost analysis for each product for 2010:

Kevin Sharp, the firm's cost accountant, has just returned from a seminar on activity-based costing. To apply the concepts he has learned, he decides to analyze the costs incurred for Products A and B on an activity basis. In doing so, he specifies the following first and second allocation processes:


FIRST STAGE: ALLOCATIONS TO DEPARTMENTS

SECOND STAGE: ALLOCATIONS TO PRODUCTS

Source: Adapted from Harold P. Roth and A. Faye Borthick, "Getting Closer to Real Product Costs," Management Accounting (May 1989), pp. 28–33. Reprinted from Management Accounting.
Copyright by Institute of Management Accountants, Montvale, NJ.
a. Determine the total overhead for Madolfo Ltd.
b. Determine the plantwide overhead rate for the company, assuming the use of direct labor hours.
c. Determine the cost per unit of Product A and Product B, using the overhead rate found in (b).
d. Determine the cost allocations to departments (first-stage allocations). Allocate costs from the departments in the following order: building occupancy, purchasing, and power. Finish the cost allocations for one department to get an "adjusted" cost to allocate to the next department.
e. Using the allocations found in (d), determine the cost allocations to products (second-stage allocations).
f. Determine the cost per unit of Product A and Product B using the overhead allocations found in(e).

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Product A Product B Both Products Cost Machine operations Machine operations Power used (kW hours) 2 8,500,000 Other activity data $1,000,000 $100,000 Number of purchase orders MatertalY 2 Cost Pool Power Purchasing Building occupancy Cost Object Departments Material Departments Activity Allocation Base Kilowatt hours Number of purchase orders Square feet occupied Cost Pool Departments Indirect labor Power Machinery related Building occupancy Material purchasing Cost Object Activity Allocation Base Products Products Products Products Products Hours worked Machine hours Machine hours Machine hours Materials used