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Part A: Best Corporation manufactures two products 3,000 units of Neptune and 7,000 units of Poseidon Currently the company uses a plantwide overhead rate based
Part A: Best Corporation manufactures two products 3,000 units of Neptune and 7,000 units of Poseidon Currently the company uses a plantwide overhead rate based on direct labor hours. It is considering implementing an ABC system that allocates all of its manufacturing overhead to four cost pools. The following information is available for the company as a whole and for Neptune and Poseidon products. Estimated OH Expected Activity Cost Pool Activity Driver activity Usage Machining machine hours $360000 9,000 mhrs Setups # of setups $16,000 400 setups Design # of products $120,000 2 products General Factory direct labor hrs $480,000 16,000 dlhs cost Activity Usage machine hours # of setups # of products direct labor hrs Neptune 3000 120 1 6,000 Poseidon 6000 280 1 10,000 Required: 1. Determine the activity cost rate for the four cost pools. Which of the four activities is a batch level activity? Which of the four activities is a product level activity? Explain your answer. 2. Using ABC find the total manufacturing overhead allocated to Neptune and to Poseidon. 3. If direct material and direct labor per unit for Neptune is $220 and for Poseidon is $325, what is the total cost per unit for making one Neptune and one Poseidon under the ABC approach
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