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Sullivan Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented below: (Click the icon to view
Sullivan Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented below: (Click the icon to view the data.) Total manufacturing overhead costs are as follows: Requirements 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product. 2. Compute the manufacturing cost per unit for each product. 3. How might Sullivan use the new cost information from its activity-based costing system to better manage its business? Total Machining costs Setup costs Inspection costs 400,000 125,000 120,000 ... Requirement 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product. Start by selecting the cost driver for each overhead cost pool. Overhead Cost Pool Cost Driver Machining Set-up Inspection Data table Mathematical Financial Annual production in units Direct materials costs Direct manufacturing labor costs 50,000 125,000 175,000 $ 437,500 EA 75,000 $ 187,500 Direct manufacturing labor-hours 3,000 7,500 Machine-hours 40,000 60,000 Number of production runs 50 50 Inspection hours 1,000 600
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