Question
Grass Inc. identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of lawn mowerss Type of Mowers
Grass Inc. identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of lawn mowerss
Type of Mowers | |||||||
Activity (Cost) | Cost Driver | Deluxe | Moderate | Economy | |||
Machine maintenance ($545,600) | Number of machine hours | 220 | 780 | 1,200 | |||
Setups ($416,000) | Number of setups | 29 | 13 | 6 | |||
Quality control ($203,322) | Number of inspections | 15 | 34 | 45 | |||
Rent ($408,100) | Number of square feet | 420 | 180 | 110 | |||
The company produced the following number of lawn mowers during the prior year.
Deluxe | Moderate | Economy |
500 | 1,440 | 1,970 |
1. Grass Inc. currently allocates all overhead costs based on machine hours. Determine the overhead cost per mower for the deluxe type. (choose the closest number).
2. Determine the overhead cost for one unit of economy mower, assuming that Grass Inc. uses an activity-based costing system. (choose the closest number)
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