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Waymire Ltd. currently uses a traditional costing system based on direct labour hours to allocate overhead. This year, the company has budgeted to produce
Waymire Ltd. currently uses a traditional costing system based on direct labour hours to allocate overhead. This year, the company has budgeted to produce 1,560 units of one of its products. Each unit requires 3 hours of direct labour. For the coming year, the company is considering changing to an activity based costing system by allocating overhead based on 2 activities. The following are the activities, budgeted total cost and cost drivers per activity for the upcoming year: Activity Cost driver Cost Cost Base Volume Assembly direct labour hours $402,000 108,000 Inspection # of inspections $710,000 31,300 Waymire Ltd. has estimated the consumption of inspections to be 3,070 for the year. What is the product's overhead cost per unit if Waymire continues to allocate overhead using direct labour hours?
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