Question
Private Corporation manufactures two types of transpondersno. 156 and no. 157and applies manufacturing overhead to all units at the rate of $79.00 per machine hour.
Private Corporation manufactures two types of transpondersno. 156 and no. 157and applies manufacturing overhead to all units at the rate of $79.00 per machine hour. Production information follows.
No. 156 | No. 157 | ||||||||||
Anticipated volume (units) | 7,000 | 16,500 | |||||||||
Direct material cost | $ | 45 | $ | 70 | |||||||
Direct labor cost | 50 | 30 | |||||||||
The controller, who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours worked, and outgoing shipments, the activities' three respective cost drivers, follow.
No. 156 | No. 157 | Total | |||||||||
Setups | 65 | 45 | 110 | ||||||||
Machine hours worked | 15,500 | 28,000 | 43,500 | ||||||||
Outgoing shipments | 125 | 85 | 210 | ||||||||
The firm's total overhead of $3,436,500 is subdivided as follows: manufacturing setups, $265,000; machine processing, $2,665,000; and product shipping, $506,500.
Required:
- Compute the pool rates that would be used for manufacturing setups, machine processing, and product shipping in an activity-based costing system.
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