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Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic. Activity Expected Costs

Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic.

Activity Expected Costs Expected Activity
Handling materials $ 625,000 100,000 parts
Inspecting product 900,000 1,500 batches
Processing purchase orders 105,000 700 orders
Paying suppliers 175,000 500 invoices
Insuring the factory 300,000 40,000 square feet
Designing packaging 75,000 2 models

Assume that the following information is available for the companys two products for the first quarter of 2017.

Deluxe Model Basic Model
Production volume 10,000 units 30,000 units
Parts required 20,000 parts 30,000 parts
Batches made 250 batches 100 batches
Purchase orders 50 orders 20 orders
Invoices 50 invoices 10 invoices
Space occupied 10,000 sq. ft. 7,000 sq. ft
Models 1 model 1 model

Required: Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate answers to 2 decimal places.)

Deluxe
Activity Activity Rate Cost driver quantity incurred OH Allocated
Handling materials
Inspecting product
Processing orders
Paying suppliers
Insuring factory
Designing packaging
Basic
Activity Activity Rate Cost driver quantity incurred OH Allocated
Handling materials
Inspecting product 0
Processing orders 0
Paying suppliers 0
Insuring factory 0
Designing packaging 0

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