Question
Sunland is an electronics components manufacturer. Information about the companys two products follows: AM-2 FM-9 Units produced 25,000 5,000 Direct labor hours required for production
Sunland is an electronics components manufacturer. Information about the companys two products follows: AM-2 FM-9 Units produced 25,000 5,000 Direct labor hours required for production 12,500 15,000 Units per batch 5,000 500 Shipping weight per unit 0.50 lbs. 10 lbs. The company incurs $899,250 in overhead per year and has traditionally applied overhead on the basis of direct labor hours. Assume that Sunland has identified three activity cost pools. Pool Cost Cost Driver Assembly $577,500 Direct labor hours Setup 40,500 Number of setups (1 per batch) Packaging 281,250 Weight
(i) Given these activity pools and cost drivers, how much overhead should be allocated to each product? AM-2 FM-9
(ii) What overhead cost per unit will be allocated to each product?
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