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 $$150,000$ in total manufacturing overhead.

Activity Cost Pool Data

Activity Colit Pool

Activity Coit Pool

Cost Driver Quantity

Percent of Total Manufacturing

Overhead

Materials Ordering and Number of purchase Inspection orders

$2,500$ orders $30\%$

Equipment Setup

Number of setups

$1750$ setups

$30\%$

Quality Control

Number of inspections

$3,500$ inspections

$25\%$

Number of direct labor hours

$15,000$ hours

$15\%$

Other hours

Cost Driver

$2,500$ orders

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 $$150,000$ in total manufacturing overhead.

Activity Cost Pool Data

Activity Cost Pool

Materials Ordering and Number of purchase Inspection orders

Equipment Setup

Quality Control

Other

Other

Number of direct labor hours

Cost Driver

Number of setups

Number of inspections

$3,500$ inspections

$15,000$ hours

$15\%$

Percent of Total Manufacturing

Overhead

Cost Driver Quantity

$2,500$ orders $,30\%$

$1750$ setups $,30\%$

$25\%$

$15\%$

Project Requirements:

Calculate total manufacturing overhead cost allocated to each activity cost pool.

Calculate the activity rate for each activity cost pool.

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.

Calculate manufacturing overhead allocated in the year to your bakery product.

Estimate total units produced in the year and calculate

Project Requirements:

Calculate total manufacturing overhead cost allocated to each activity cost pool.

Calculate the activity rate for each activity cost pool.

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.

Calculate manufacturing overhead allocated in the year to your bakery product.

Estimate total units produced in the year and calculate manufacturing overhead per unit.

Using direct materials per unit and direct labor per unit from the job order costing project, calculate unit product cost.

In a few sentences, explain the differences in unit product cost between job order and activity$-$based costing.