Activity-bused cosiing; advanced) Stylish Components manufactures two products. Following is a production and cost analysis for each product for the year 2007.

Peter Yound, 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 from an activity basis. In doing so, he specifies the following first and second allocation processes:

a. Determine the total overhead for Stylish Components.

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 over¬ head application rate found in part (b).

d. Using the step-down approach, determine the cost allocations to depart¬ ments (first-stage allocations). Allocate in the following order: building occupancy, purchasing, and power.

e. Using the allocations found in part (d), determine the cost allocations to products (second-stage allocations).

f. Determine the cost per unit of Product A and Product B using the over¬ head allocations found in pan (e).

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Cost Component Product A Product B Both Products Cost Units produced 10,000 10,000 20,000 Raw material used (units) X 50,000 Y 50,000 100,000 100,000 $ 800,000 100,000 $ 200,000 Labor hours used Department 1 $ 681,000 Direct labor 20,000 5,000 25,000 $ 375,000 Indirect labor Inspection 2,500 2,500 5,000 Machine operations 5,000 10,000 15,000 Setups 200 200 400 Department 2 $ 462,000 Direct labor 5,000 5,000 10,000 $ 200,000 Indirect labor Inspection 2,500 5,000 7,500 Machine operations 1,000 4,000 5,000 Setups 200 400 600 Machine hours used Department 1 5,000 10,000 15,000 $ 400,000 Department 2 5,000 20,000 25,000 $ 800,000 Power used (kw hours) $ 400,000 Department 1 Department 2 1,500,000 8,500,000 Other activity data Building occupancy $1,000,000 Purchasing $ 100,000 Number of purchase orders Material X Material Y Square feet occupied Purchasing Power Department 1 Department 2 200 300 10,000 40,000 200,000 250,000