fenya industries produces two surge protectors K2761 which has 6 outlets and D 3354 with eight outlets and two phone line connections. Because of the differences the company plans to use activity based costing to allocate overhead cost. the company has idenified four activity pools.

Activity pool Cost pool total Cost driver

Machine setup $144000 number of setups

machine operation 360000 number of machine hours

Quality control 57600 number of inspectios

Packaging 38400 number of units

Total overhead cost 600000

The following table below signifies the expected activity for each product

Number of setups Number of machine hours Number of inspection Number of units

K2761 48 1400 78 25000

D3354 72 2600 172 15000

Total 120 4000 250 40000

a. Complete overhead rate for each activity pool

b.Determine overhead cost allocated to each product

Part b

use the information above to answer the following questions. Assume that before shifting to activity based costing, Fenya industries allocated all overhead costs based on direct labor hours. Direct labor data related to the two surge protectors are as follows

Direct labor hours

K2761 32000

D3354 18000

TOTAL 50000

c. compute the amount of overhead cost allocated to eah type of surge protectorwhen using direct labor hours as allocation base

d. Determine the cost per unit for overhea when using direct labor hours as allocation base and when using ABC

e. explain why the uit per overhead cost is lower for the higher volume product than using ABC