QUESTION:

William Inc. is considering the adoption of an activity-based costing system. They have gathered the following data with regards to budgeted activities, costs, and cost drivers:

Activity	Budgeted Overhead	Activity Driver	Budgeted Capacity	Per
Setups	$189,000	Number of setups	225	Setups
Material Purchasing	$27,000	Number of orders	1,350	Orders
Machining	$252,000	Machine hours	15,750	Machine hours
Packaging	$45,000	Packing orders	1,875	Packing orders

What is the activity rate that would be used for Setups?

HINT: remember to apply the entry rules.

What is the activity rate that would be used for Material Purchasing?

HINT: remember to apply the entry rules.

What is the activity rate that would be used for Machining?

HINT: remember to apply the entry rules.

What is the activity rate that would be used for Packaging?

HINT: remember to apply the entry rules.

The company produces a product, Module W. The following information about actual production for the year is as follows:

	Module W
Units completed	7,500
Number of setups	150
Number of orders	450
Machine hours	9,000
Packing orders	575

Using the above information, determine the total overhead applied to all of the Module W products for the year.

Using the total overhead allocated to Module W, calculate the overhead allocated to each unit of Module W.