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North Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Direct materials Direct labor
North Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Direct materials Direct labor Rounded Edge Squared Edge Total $ 152,000 $ 62,400 24,400 73,200 Overhead (using plantwide rate) Total product cost $ 160,000 Units produced Product cost per unit 20,000 $ 8 $ 89,600 47,600 142,800 72,000 216,000 $ 280,000 $ 440,000 28,000 $ 10 North Company's controller wants to apply activity-based costing to allocate the $216,000 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 information is collected. Activity Purchasing Depreciation Setup $ 10,800 113,200 92,000 Budgeted Cost Activity Cost Driver Purchase orders Rounded Edge Machine hours Setups 218 orders 1,000 hours 80 setups Activity Usage Squared Edge 862 orders 3,000 hours 420 setups Total $ 216,000 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. Total 1,080 orders 4,000 hours 500 setups
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