2 3 Estimated Annual Estimated Annual Activity Ordering parts Tracking inventory of parts Running machines Cost Driver Overhead Costs Cost Driver Activity 5 400.000 its purchased hours Inspecting finished products Vistal 560,000 150,000 200,000 2,000 mach 1,000 inspection hones The company produces three products, Z1, Z2, and 23. Information about these products for the month of January follows: Direct materials cost per unit Direct labor cost per unit Overhead cost per unit Product cost per unit Units produced ZN 22 Z3 5 75 $200 25 750 250 units 500 units 700 units Actual cost driver activity levels for the month of January are as follows: 21 22 243 Number of purchase requisitions SO 70 Number of parts purchased 4,000 3,300 Machine hours 330 240 100 3,600 310 Inspections hours 10 50 130 6 7 Required: 1. Using the estimates for the year, compute the predetermined overhead rate for each activity (this is step 4 8 of the activity-based costing process). 9 10 11 12 2. Using the activity rates calculated in requirement 1 and the actual cost driver activity levels shown for January, allocate overhead to the three products for the month of January (this is step 5 of the activity-based 3. For each product, calculate the overhead cost per unit for the month of January. Round results to the 4. For each product, calculate the product cost per unit for the month of January. Round results to the nearest 13 ABC 14 Step 1. Identify costly activities required to complete products. 15 Step 2. Assign overhead costs to the activities identified in step 1. 16 Step 3. Identify the cost driver for each activity. 17 Step 4 Calculate a predetermined overhead rate for each activity. 18 Step 5. Allocate overhead costs to products. #2 Z1 Z2 Z3 Activity Pools 20 21 Ordering Parts Cost Pools Driver Estimated Driver OH Rate Driver Applied Driver Applied Used Overhed Used Overhed Driver Used Applied Overhed 400,000 Purchase requisitions 5,000 22 Tracking Inventory of parts 560,000 # of parts purchased 23 Running machines 350,000 Machine hours 24 inspecting finished products 200,000 Inspection hours 25 26 80,000 7.000 1,000 27 26 261 Units Produced Overhead Cost per Unit Direct materials Direct Labor Total Unit Cost 2.24 2.26 2.32 2.34 2.38 3.31 3.32 3.41 3.46 Select destination and press ENTER or choose Paste