1. Owly Corporations Midland, Texas factory produces three products: desktop computers, laptop computers, and tablets. The current policy is to split the receiving cost by the production volumes of three products. Owly is thinking of adopting a new cost driver to allocate the receiving overhead to the products made in this factory. The new cost driver Owly is considering would be the number of part shipments received. The number of units produced and the number of part shipments for each product are as follows:

Product	Units Produced	Parts Shipments Received
Desktop	1,000	50
Laptop	1,000	100
Tablet	1,000	150

Required:

The total receiving cost is $540,000. Each parts shipment is arriving at the factory in identical size and weight.

A. What is the per unit amount of receiving overhead allocated to each product (desktop, laptop, tablet) using the production volume as an allocation base? [10 Marks] a) Receiving overhead allocated to Desktop per unit b) Receiving overhead allocated to Laptop per unit c) Receiving overhead allocated to Tablet per unit

B. What would the per unit amount of receiving overhead allocated to each product (desktop, laptop, tablet) using the parts shipment received as a cost driver? [10 Marks] a) Receiving overhead allocated to Desktop per unit b) Receiving overhead allocated to Laptop per unit c) Receiving overhead allocated to Tablet per unit

C. Which cost driver is more appropriate? The manager wants to choose a cost driver to reflect the different resources used to receive parts for each product? (multiple-choice, no supporting argument is required) [5 Marks] a) Production Volume b) # of Parts Shipments Received