1 - use total hours as the base to calculate overhead rate

2 - total overhead cost for each product

3 - overhead cost/unit and total cost/unit = direct materials + direct materials + overhead

4 - overhead rate for each of six pools

5 - total overhead cost for each product

6 - overhead cost per unit = total overhead cost / units produced, total cost per each unit = direct materials + direct labor + overhead per unit

O ACTIVITY BASED COSTING PROBLEM Elliot Page, Inc. manufactures and sells two products, backpacks and purses. Annual sales in units of each, the labor time per unit and the total manufacturing time per year are described below: HOURS Backpacks: 2,000 units 5 hours 10,000 40,000 Purses: 10,000 units 4 hours Total hours 50,000 PURSES BACKPACKS $17 $25 Direct materials 24 Direct labor Total overhead: $800,000 BREAKDOWN OF OVERHEAD CoSTS: Estimated Total Activity Backpacks Purses Costs 40,000 80,000 10,000 50,000 Labor related (labor hours) 2,000 5,000 3,000 150,000 Machine setups of setups) 3,000 5,000 8,000 160,000 Product testing of tests) 300 100 400 Production orders of orders) 70,000 600 150 750 Material receipts of receipts) 90,000 12,000 28,000 40,000 250,000 General factory (machine hours)