Peter Company produces mathematical and financial calculators and operates at capacity. Data related to the two products follows. (Click the icon to view the data.) Total manufacturing overhead costs are: (Click the icon to view the overhead costs.) Requirements 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product 2. Compute the manufacturing cost per unit for each product. 3. How might Peter's managers use the new cost information from its activity-based costing system to better manage its business? Requirement 1. Choose a cost driver for each overtread cost pool and calculate the manufacturing overhead cost per unit for each product. Data Table Begin by choosing a cost driver for each overhead cost pool. Cost driver Rate Activity Machining Financial 100,000 400,000 Set up Inspection Mathematical 50,000 200,000 $ 75,000 $ 2,500 $ 150,000 Annual production in units Direct materials cost Direct manufacturing labor cost Direct manufacturing labor hours Machine-hours Number of production runs Inspection hours Determine the formula to calculate the overhead allocated to each product. 5.000 = Overhead allocated to product 20,000 40,000 40 40 Now calculate the total overhead allocated to each product and the overhead cost per unit. (Round your answer to the nearest cent.) 800 400 Mathematical Financial Machining costs Setup costs Print Done Inspection costs Total overhead costs i Data Table Manufacturing overhead cost per unit Total 360,000 Choose from any list or enter any number in the input fields and then continue to the next question. $ ? Machining costs Setup costs Inspection costs 108,000 102,000 Peter Company produces mathematical and financial calculators and operates at capacity. Data related to the two products follows. (Click the icon to view the data.) Total manufacturing overhead costs are: (Click the icon to view the overhead costs.) Requirements 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product 2. Compute the manufacturing cost per unit for each product. 3. How might Per anage its business? i Data Table Financia Manufacturing overhead cost per unit Requirement 2. Compute the manufacturing cost per unit for each product Determine the formula to calculate the direct costs per unit. Mathematical 50,000 100,000 $ 200,000 $ 400,000 + = Direct cost per unit $ Annual production in units Direct materials cost Direct manufacturing labor cost Direct manufacturing labor-hours Machine-hours Number of production runs Inspection hours Now compute the manufacturing cost per unit for each product. 75,000 $ 2,500 20,000 150,000 5,000 40,000 Mathematical Financial 40 40 800 400 Print Done Manufacturing cost per unit Requirement 3. How might Peter's managers use the new cost information from its activity-based costing system to better manage its business? (Select all that apply.) i Data Table A. Managers can use this information to improve advertising campaigns and their public image B. Managers can use this information to devise employee compensation packages. C. Managers can use this information for design decisions, and to plan and manage activities. D. Managers can use this information for pricing and product-mix decisions, and for cost reduction and process-improvement decisions. Total 360,000 Choose from any list or enter any number in the input fields and then continue to the next question. $ ? Machining costs Setup costs 108,000 102,000 Inspection costs
