Question
Currambine Pty Ltd manufactures two products, Product C and Product D. In the current year Currambine produced 4,000 units of Product C and 2,000 units
Currambine Pty Ltd manufactures two products, Product C and Product D. In the current year Currambine produced 4,000 units of Product C and 2,000 units of Product D. The Company uses normal costing and activity-based costing (ABC) to allocate overheads. The following are the budgeted activity rates calculated for its three (3) activities:
activity Activity rate
machine set-ups $50
design $60
general factory $9
Actual data relating to these activities for the current period are given below: actual activity
activity cost pool actual overhead cost product C product D total
machine set-ups $13630 100 190 290
design $113750 500 1250 1750
general factory $68860 4160 2100 6260
total $196240
1.Calculate the unit manufacturing overhead cost for each product.
a.Classify each of the activity according to the cost hierarchy level; and
b.specify a possible allocation base/ cost driver.
Activity a.Cost Hierarchy Level b. Allocation base/ cost driver
1.Machine set-ups
2.Design
3.Calculate for each activity and in total:
a.The amountof overheads over or underallocated,
b.specifying clearly whether the amount is over or under allocated
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