Y Company is exploring the possibility of adopting activity-based costing ( ABC) to assign manufacturing overhead costs to products.

A more detailed examination of the company's manufacturing overhead costs reveals the following:

Activity	Cost	Activity driver ( cost driver)	Expected activity level in total for the two products
setting up machines	$400,000	# machine set ups	500
machining	$1,500,000	# machine hours	100,000
inspecting	$450,000	# inspections	1,500
material requisitions	$ 750,000	# material requisitions	15,000
purchasing	$150,000	# purchase orders	500
Total MOH	$3,250,000

Information on the expected activity levels for the two products is:

	Standard Expected activity level	Deluxe Expected activity level
number of machine set ups	50 set ups	450 machine set ups
number of machine hours used	20,000 machine hrs.	80,000 machine hrs.
number of inspections used	0 inspections	1,500 inspections
number of material requisitions	5,000 requisitions	10,000 requisitions
number of purchase orders	100 purchase orders	400 purchase orders

b) RECORD YOUR ANSWERS ON THE TABLE BELOW ( show all your calculations)

Assume that 10,000 standard and 5,000 deluxe units are produced, Determine the ( 10 marks)

1. amount of overhead to be allocated to each product ( Standard and Deluxe) using activity-based costing to allocate manufacturing overhead.

1. The total manufacturing costs for each product under ABC

1. The unit cost for each product under ABC

RECORD YOUR ANSWERS to b) ON THE TABLE BELOW ( show all your calculations)

		Standard 10,000 units		Deluxe 5,000 units
MOH Allocated
Setting up machines
Machining
Inspection
Material requisitions
Purchase orders
Total MOH allocated
Total manufacturing costs
Unit cost