Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the
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Question:
Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data.
Rounded Edge Squared Edge Total
Direct materials $ $ $
Direct labor
Overhead using plantwide rate
Total product cost $ $ $
Units produced
Product cost per unit $ $
Northwests controller wants to apply activitybased costing to allocate the $ of overhead cost to the two products to see whether product cost per unit would change markedly from that above. The companys budgeted activity usage equals its actual activity usage for the period. The following additional information is collected.
Activity Budgeted Cost Activity Cost Driver Activity Usage
Rounded Edge Squared Edge Total
Purchasing $ Purchase orders orders orders orders
Depreciation of machinery Machine hours hours hours hours
Setup Setups setups setups setups
Total $
Required:
Compute the activity rate for each activity using activitybased costing.
Compute overhead cost per unit for each of the two products using activitybased costing.
Determine product cost per unit for each of the two products using activitybased costing.
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