Project Summary:

The local bakery has been using job order costing and is deciding whether to use activity-based costing. The bakery makes many different products, including the one you produced in the job order costing project. In this project, you will calculate the unit product cost under activity-based costing for the same bakery product you produced in the job order costing project.

Project Data:

The bakery has identified the following activity cost pools, cost drivers, and total yearly quantity for the cost drivers, and percentage of total estimated manufacturing overhead cost allocated to each cost pool. The bakery estimates $50,000 in total manufacturing overhead.

Activity Cost Pool	Cost Driver	Cost Driver Quantity	Percent of Total Manufacturing Overhead
Materials Ordering and Inspection	Number of purchase orders	1,500 orders	30%
Equipment Setup	Number of setups	750 setups	30%
Quality Control	Number of inspections	2,500 inspections	25%
Other	Number of direct labor hours	10,000 hours	15%

Project Requirements:

1. Calculate total manufacturing overhead cost allocated to each activity cost pool.
2. Calculate the activity rate for each activity cost pool.
3. Estimate the cost driver quantity allocated to your bakery product from the job order costing project. Note: This will not be the entire cost driver quantity as the bakery makes many different products. Determine a reasonable estimate based on your product.
4. Calculate manufacturing overhead allocated in the year to your bakery product.
5. Estimate total units produced in the year and calculate manufacturing overhead per unit.
6. Using direct materials per unit and direct labor per unit from the job order costing project, calculate unit product cost.
7. In a few sentences, explain the differences in unit product cost between job order and activity-based costing.