Activity-Based Costing

Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools:

	Fabrication Department	Finishing Department	Cost Driver
Maintenance	$ 60,000	30,000	Machine hours
Materials handling	90,000	45,000	Material moves
Machine	210,000	15,000	Machine setups
Inspections	-	75,000	Inspection hours
Total	$ 360,000	$165,000

The following activity predictions were also made for the year:

	Fabrication Department	Finishing Department
Machine hours	5,000	2,500
Material moves	1,500	750
Machine setups	350	25
Inspection hours	-	500

It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rate. The production manager has provided the following data for the production of a batch of 100 units for each of these models:

Product Costs per Unit	SW100	SG150
Direct materials
Direct labor
Manufacturing overhead:
Fabrication Dept.
Finishing Dept.
Total cost per batch
Number of units per batch
Cost per unit

c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities.

Round rate to two decimal places, if applicable.

Activity-based overhead rates:
Maintenance
Materials handling
Machine setup
Inspection activities

Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.

Product Costs per Unit	SW100	SG150
Direct materials
Direct labor
Manufacturing overhead:
Maintenance activity
Maintenance handling activity
Machine setups activity
Inspections activity
Total cost per batch
Number of units per batch
Cost per unit