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Bramble Industries manufactures several products including a basic case for a popular smartphone. The company is considering adopting an activity-based costing approach for setting its

Bramble Industries manufactures several products including a basic case for a popular smartphone. The company is considering adopting an activity-based costing approach for setting its budget. The companys production activities, budgeted activity costs, and cost drivers for the coming year are as follows.

Activity Activity Overhead $ Cost Driver Cost Driver Quantity
Machine setup $ 208,260 # of setups 780
Inspection 134,780 # of quality tests 460
Materials receiving 219,300 # of purchase orders 1,700

The budgeted data for smartphone case production are as follows.

Direct materials $2.30 per unit
Direct labor $0.57 per unit
Number of setups 88
Number of quality tests 390
Number of purchase orders 70
Production 15,000 units

Calculate the activity-based unit cost of the smartphone case. (Round answer to 2 decimal places, e.g. 15.25.)

Activity-based unit cost

$_________________

__________________________________________________________________________________________________________________________________________

Problem:

Sunland is an electronics components manufacturer. Information about the companys two products follows:

AM-2 FM-9
Units produced 21,200 3,600
Direct labor hours required for production 16,000 25,000
Units per batch 4,000 90
Shipping weight per unit 0.50 lbs. 4 lbs

The company incurs $1,336,075 in overhead per year and has traditionally applied overhead on the basis of direct labor hours.

AM-2 FM-9
Overhead allocated to each product = $

521280

$

814500

AM-2 FM-9
Overhead cost per unit = $

24.58

$

226.25

Assume that Sunland has identified three activity cost pools.

Pool Cost Cost Driver
Assembly $984,000 Direct labor hours
Setup 124,575 Number of setups (1 per batch)
Packaging 227,500 Weight

(i) Given these activity pools and cost drivers, how much overhead should be allocated to each product? (Round per unit rates to 2 decimal places, e.g. 3.54 and final answers to 0 decimal places, e.g. 45,000.)
AM-2 FM-9
Total allocated overhead $

------------------

$

--------------

(ii) What overhead cost per unit will be allocated to each product? (Round answers to 2 decimal places, e.g. 15.25.)
AM-2 FM-9
Overhead cost per unit = $

-------------------

$

----------------

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