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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.)
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