Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Keeley Company makes products C and D. Information for overhead costs and for th

ID: 2461062 • Letter: K

Question

Keeley Company makes products C and D. Information for overhead costs and for the two products appears below. The company makes 50,000 units of product C each year and 20,000 units of Product D.

How much overhead would be assigned to each unit of Product C? A. $860,000 per unit B. $100 per unit C. $47 per unit D. $17.20 per unit

activity driver overhead cost prod c usage prod d usage setups # of setups 200000 500 setups 1500 setups ordering parts # of parts 300000 60000 parts 40000 parts machining machine hours 600000 12000 machine hours 6000 machine hours inspections # of inspections 400000 10000 inspections 40000 inspections shipping # of shipments 300000 10000 shipments 10000 shipments total overhead 1800000

Explanation / Answer

Activity

Driver

Overhead Cost

Product C

Product D

Allocation Product C

Allocation Product D

Set ups

No of Set ups

               200,000

               500

           1,500

                             50,000

                          150,000

Ordering Parts

No of Parts

               300,000

         60,000

         40,000

                          180,000

                          120,000

machining

machine hrs

               600,000

         12,000

           6,000

                          400,000

                          200,000

Inspection

No of inspections

               400,000

         10,000

         40,000

                             80,000

                          320,000

Shipping

No of Shipments

               300,000

         10,000

         10,000

                          150,000

                          150,000

Toal Overhead

           1,800,000

                          860,000

                          940,000

No of Units

                             50,000

Cost per unit

                               17.20

Activity

Driver

Overhead Cost

Product C

Product D

Allocation Product C

Allocation Product D

Set ups

No of Set ups

               200,000

               500

           1,500

                             50,000

                          150,000

Ordering Parts

No of Parts

               300,000

         60,000

         40,000

                          180,000

                          120,000

machining

machine hrs

               600,000

         12,000

           6,000

                          400,000

                          200,000

Inspection

No of inspections

               400,000

         10,000

         40,000

                             80,000

                          320,000

Shipping

No of Shipments

               300,000

         10,000

         10,000

                          150,000

                          150,000

Toal Overhead

           1,800,000

                          860,000

                          940,000

No of Units

                             50,000

Cost per unit

                               17.20