Questions:

2. How much overhead cost is allocated to product A and product B?
4. What is the cost per unit of A and B?
6. What is the selling price per unit of A and B, assuming a mark-up of 40% of cost.

A company has identified the following overhead costs and cost drivers for the coming year:

Overhead Item Cost Driver Budgeted Cost ($) Budgeted Activity Level

Machine set-up No. of set-ups 20,000 200

Inspection No. of inspections 130,000 6,500

Materials handling No. or material moves 80,000 8,000

Engineering Engineering hours 50,000 1.000

The following information was collected from the two products that were bring produced:

                                  A           B

Direct Materials $ 12,000 $ 8,000

Direct Labor $ 2,000 $ 4,000

Units completed 50 200

No. of set-ups 2 4

No. of inspections 10 30

No. of material moves 10 50

Engineering hours 50 10