Refer to the information in Exercise 4-1. Assume that the following information is available for the company's two products for the first quarter of 2015.
_____________________Deluxe Model............... Basic Model
Production volume. . . . . . . . . 10,000 units ................ 30,000 units
Parts required . . . . . . . . . . . . 20,000 parts ................ 30,000 parts
Batches made . . . . . . . . . . . . 250 batches ................. 100 batches
Purchase orders . . . . . . . . . . . . . 50 orders ................... 20 orders
Invoices . . . . . . . . . . . . . . . . . 50 invoices .................. 10 invoices
Space occupied . . . . . . 10,000 square feet .......... 7,000 square feet
Models . . . . . . . . . . . . . . . . . . . . 1 model ......................1 model
In Exercise 4-1
Xie Company identified the following activities, costs, and activity drivers for 2015. The company manufactures two types of go-karts: Deluxe and Basic.
Activity ______________________Expected Costs _________Expected Activity
Handling materials . . . . . . . . . . . . . . . . $625,000 .................... 100,000 parts
Inspecting product . . . . . . . . . . . . . . . . 900,000 ..................... 1,500 batches
Processing purchase orders . . . . . . . . . 105,000 .......................... 700 orders
Paying suppliers . . . . . . . . . . . . . . . . . . 175,000 ....................... 500 invoices
Insuring the factory . . . . . . . . . . . . . . . 300,000 ................ 40,000 square feet
Designing packaging . . . . . . . . . . . . . . . 75,000 ........................... 2 models
Required
Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model?