Question 1:

EgoDrone Inc. manufactures two models of "Selfie Drones" - small toy helicopters which follow users around taking aerial video while the user participates in extreme sports.Whether the user is rafting down a raging river, or renewing their life insurance, all activities can be documented by the products two models: "Sport" or "Pro".The company will use activity-based costing to apply its estimated $350,000 of overhead costs to its products.Information about its overhead follows:

Activity (Cost Driver)

Estimated MOH

Expected Activity

Total

Sport

Pro

Assembly (Machine Hours)

$40,000

5,000

3,000

2,000

Quality control (# of inspections)

110,000

550

250

300

Machine Setups (# of Setups)

200,000

200

70

130

$350,000

The following cost data is known:

Sport

Pro

Direct Materials

$300

$500

Direct Labour

50

80

Number of units produced

250 units

150 units

Required:

a)Compute the activity rates for each activity.

b)Determine the expected unit cost of each product.