Question
Xie Company identified the following activities, costs, and activity drivers for 2015. 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 2015. 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 2015. |
| 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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