Hill Mfg is a manufacturing company.

INFORMATION:

Below the OH Activity costs for X-20 and Y-30.

Machine setups - $130 per setup Soldering - $2.25 per joint

Quality control - $40 per inspection Shipments - $220 per shipment

Purchase orders - $75 per order Machine related - $8 per machine hour

	Product X-20			Product Y-30
	Expected Activity	Amount of OH		Expected Activity	Amount of OH
Machine setups	1000 setups	$130,000		600 setups	78,000
Quality control	4,000 inspect	160,000		5,000 inspections	200,000
Purchase orders	840 orders	63,000		360 orders	27,000
Soldering	60,000 joints	135,000		140,000 joints	315,000
Shipments	400 shipments	88,000		200 shipments	44,000
Machine related	30,000 mach hrs	240,000		40,000 mach hrs.	320,000
Total overhead costs		$816,000			984,000

CALCULATE THE PER UNIT COST (already done below)

Below the per unit cost for X-20 and Y30

	Amount of OH	OH cost / unit X-20	Amount of OH	OH cost / unit X-30
Machine setups	130000	$ 4.33	78000	$ 15.60
Quality control	160000	$ 5.33	200000	$ 40.00
Purchase orders	63000	$ 2.10	27000	$ 5.40
Soldering	135000	$ 4.50	315000	$ 63.00
Shipments	88000	$ 2.93	44000	$ 8.80
Machine related	240000	$ 8.00	320000	$ 64.00
Total overhead costs	816000	$ 27.20	984000	$ 196.80

QUESTION TO ANSWER:

Identify 2 activity costs (from above) that you would suggest that Hill Mfg investigate first and state Why did you pick these 2 costs?

Discuss the reasoning behind your choices do not simply say the cost was high. Think about what is causing the high cost.