Jarme company makes 2 products and is implementing an activity-based cosing (ABC) system. Previously, all overhead had been applied on the basis of machine hours. The company produces 100,000 units of product D and 5,000 units of product F annually.

Cost Pool Driver & Level Cost in Pool Use of Driver by D Use of Driver by F

Equipment Setup----------500 setups----------------$1,000,000-----------------350 setups------------------150 setups

Materials Ordering--------10,000 orders-------------$2,000,000-----------------7,000 orders----------------3,000 orders

Quality Control-------------4,000 inspections--------$500,000-------------------2,000 inspections----------2,000 inspections

Machining-------------------50,000 machine hrs-----$5,000,000----------------40,000 machine hrs-------10,000 machine hrs

What is the overhead cost per unit for Product F when all overhead is applied based on machine hours?

a) $170

b) $340

c) $68

d) $200

What is the overhead cost per unit for Product D when all overhead is applied based on machine hours?

a) $170

b) $68

c) $340

d) $40