The Hill Mfg Firm came up with the following activity-based OH rates for general overhead.

1.(worth 20%) Using the overhead or activity rates below (already calculated for you), apply the activity costs to the Y-30 product.(I've already correctly calculated the Activity-Based OH for the X-20 product.)

Machine setups - $130 per setupSoldering - $2.25 per joint

Quality control - $40 per inspectionShipments - $220 per shipment

Purchase orders - $75 per orderMachine related - $8 per machine hour

Product X-20

Product Y-30

Expected Activity

Amount of OH

Expected Activity

Amount of OH

Machine setups

xx setups

$130,000

600 setups

Quality control

xx inspect

160,000

5,000 inspections

Purchase orders

xx orders

63,000

360 orders

Soldering

xx joints

135,000

140,000 joints

Shipments

xx shipments

88,000

200 shipments

Machine related

xx mach hrs

240,000

40,000 mach hrs.

Total overhead costs

$816,000

2.(worth 20%) The Hill Mfg Firm expects to produce and sell 30,000 X-20 products and 5,000 Y-30 products.What total Overhead per unit should be charged to each of these 2 products?

3.(worth 60%) The firm believes that it cannot raise prices on either of these 2 products in the short-term, but will investigate whether specific cost initiatives should be undertaken.

A.Calculate the per unit cost per activity

B.Next, identify 2 activity costs (from above) that you would suggest that Hill Mfg investigate first.

C.Why did you pick these 2 costs? Discuss the reasoning behind your choices - do not simply say 'the cost was high'. Think about what is causing the high cost.

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