PopUp Company produces two types of toasters, basic and deluxe.For the current period, the company reports the following data:

Basic Toaster Deluxe Toaster

Volume 20,000 units 5,000 units

Machine Hours 1,000 2,400

Batches 315 125

Engineering Modifications 20 50

Prime Costs $20,000 $30,000

Market Price $25 per unit $60 per unit

Additional Information Follows Costs Driver

Engineering Support $15,900 Engineering Modifications

Electricity 25,000 Machine Hours

Setup costs 33,900 Batches

1) Compute the manufacturing cost per unit of each toaster using the current unit-based approach. Under this system costs are assigned to the toasters on the basis of machine hours.

2) Compute the manufacturing cost per unit of each toaster using an activy-based costing approach

1)

Basic Toaster = $2.1 per unit

Deluxe Toaster = $16.56 per unit

2)

Basic Toaster = $2.81 per unit

Deluxe Toaster = $13.73 per unit

Explanation:

1)

Overhead rate = estimated overhead costs / estimated allocation base = (15,900 + 25,000 + 33,900) / (1,000 + 2,400) = $22 per machine hr

Manufacturing cost per unit = (Prime costs + Overhead) / volume

Basic Toaster = (20,000 + (1,000 x 22)) / 20,000 units = $2.1 per unit

Deluxe Toaster = (30,000 + (2,400 x 22)) / 5,000 units = $16.56 per unit

2)

Activity rates = estimated overhead costs / estimated allocation base

Engineering Support = $15,900 / (20 + 50) = $227.14 per Engineering Modification

Electricity = 25,000 / (1,000 + 2,400) = 7.35 per Machine Hour

Setup costs = 33,900 / (315 + 125) = 77.05 per Batch

Overhead costs:

Basic toaster = (20 x 227.14) + (1000 x 7.35) + (315 x 77.05) = 36,163.55

Deluxe Toaster = (50 x 227.14) + (2,400 x 7.35) + (125 x 77.05) = 38,628.25

Manufacturing cost per unit = (Prime costs + Overhead) / volume

Basic Toaster = (20,000 + 36,163.55) / 20,000 units = $2.81 per unit

Deluxe Toaster = (30,000 + 38,628.25) / 5,000 units = $13.73 per unit

3) How would I Calculate income and balance sheet with the calculations?