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3. P Corporation manufactures two products-Product ABC and Product XYZ- expected production of Product ABC is 100 units and of XYZ is 500 units. The
3. P Corporation manufactures two products-Product ABC and Product XYZ- expected production of Product ABC is 100 units and of XYZ is 500 units. The following information is available: Budgeted Overhead Costs by Activity Pool: Materials Handling Costs Purchasing Activity Costs Total Budgeted Overhead Costs $162,000 116,000 $278,000 Possible Cost Drivers: Direct Labor Hours: Product ABC Product XYZ 800 1.700 2,500 Total Direct Labor Hour Material Moves Product ABC Product XYZ 290 310 600 Total Material Moves Number of Purchase Orders: Product ABC Product XYZ 450 350 800 Total Purchase Orders Instructions a. Determine the total overhead costs and the overhead cost per unit assigned to Product ABC using a single plant-wide overhead rate based on direct labor hours (traditional normal costing). You'll need to compute the pre-determined overhead rate and the overhead applied to each product, and then the overhead cost per unit. Determine the total overhead costs and the overhead cost per unit assigned to Product ABC and to Product XYZ assuming activity based costing is used. The cost driver for the materials handling activity is number of material moves and the cost driver for the purchasing activity is number of purchase orders. You'll need to compute the pre-determined overhead rate for each activity cost pool and the amount of overhead to be applied to each product from each activity cost pool, and then the overhead cost per unit. b
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