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Part 1: D The following data has been accumulated by a manufacturing company at the beginning of the year: Activity Budgeted Cost Activity Driver Machine
Part 1: D The following data has been accumulated by a manufacturing company at the beginning of the year: Activity Budgeted Cost Activity Driver Machine Setup $36,000 120 machine setups Parts Handling 18,000 36,000 parts Quality Inspections 32.500 500 Inspections Total budgeted overhead $86,500 Information regarding the company's two products follows: Widgets Gadgets 1.680 units Unit Information Units produced Sales Price per unit Direct Materials cost Direct Labor cost Direct Labor hours 2,200 units $85 per unit $15 per unit $36 per unit 2 per unit $100 per unit $20 per unit $60 per unit 1.5 per unit Round amounts to 2 decimal places. Dar Datind Part I Required: Using a plantwide overhead rate based on 6.920 bucigeted direct labor hours, compute the overhead cost per unit and total product cost per unit for each product b. Calculate the gross profit per unit for each product using the product cost determined in tema ve Part II: The following additional information regarding production activities for the two products follows Actual Activity Usage Widgets Gadgets Machine Setups 50 setups 70 setups Parts 25,000 parts 11,000 parts Inspections 200 inspections 300 inspections Part II Required: a. Compute the overhead activity rates that would be used in activity based costing for this company b. Allocate overhead cost to Widgets and Gadgets and compute overhead cost per unit for each product using activity based costing c. Compute the total cost per unit for each product using activity based costing d. Compute the gross profit per unit using activity based costing e. Which approach, the traditional single plant-wide pre determined overhead rate (POHR) or activity based costing produces the more accurate results
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