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Exercise 17-19 (Algo) Activity-based costing to compute activity rates, overhead cost per unit, and product cost per unit LO P3 Northwest Company produces two types
Exercise 17-19 (Algo) Activity-based costing to compute activity rates, overhead cost per unit, and product cost per unit LO P3 Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Direct materials Direct labor Total product cost Overhead (using plantwide rate) Units produced Product cost per unit $ 78,000 10,200 $ 7.65 Rounded Edge $ 30,600 10,200 37,200 Squared Edge $ 42,600 Total $ 73,200 28,400 72,400 38,600) 109,600 $ 221,400 $ 143,400 14,200 $ 10.10 Northwest's controller wants to apply activity-based costing to allocate the $109,600 of overhead cost to the two products to see whether product cost per unit would change markedly from that above. The company's budgeted activity usage equals its actual activity usage for the period. The following additional information is collected. 114 orders 500 hours 40 setups Activity Usage Squared Edge 436 orders 1,500 hours 210 setups Total 550 orders 2,000 hours 250 setups Activity Purchasing Budgeted Cost Depreciation of machinery Setup $ 5,500 57,400 46,700 Activity Cost Driver Purchase orders Machine hours Setups Rounded Edge $ 109,600 Total Required: 1. Compute the activity rate for each activity using activity-based costing. 2. Compute overhead cost per unit for each of the two products using activity-based costing. 3. Determine product cost per unit for each of the two products using activity-based costing
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