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Sonoma Manufacturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Production is 700,000 units of Budget

Sonoma Manufacturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Production is 700,000 units of Budget and 200,000 units of Deluxe. Information is presented below:

Cost Drivers by Product

Activity Cost Pool

Cost Driver

Estimated Overhead

Budget

Deluxe

Ordering and Receiving

Orders

$120,000

600

400

Machine Setup

Setups

$297,000

500

400

Machining

Machine hours

$1,000,000

150,000

100,000

Assembly

Parts

$1,400,000

1,200,000

800,000

Inspection

Inspections

$300,000

550

450

Total

$3,117,000

Round answers to the nearest cent.

Required:

  1. Assume simple costing system used machine hours only as the single cost allocation base.

    1. Compute a single overhead rate

    2. Compute the amount of overheads allocated to Budget and Deluxe.

    3. Compute the amount of overhead per unit allocated to Budget and Deluxe.

b.

Compute total overhead costs assigned to each product and the overhead cost per unit for each product, using activity-based costing.

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