Randel Manufecturing has five activity cost pools and two products (a budget tap

Question

Randel Manufecturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Information is presented below: Cost Drivers by Product Activity Cost PoolCost Driver Ordering and Receiving Orders Machine Setup Machining Assembly Inspectiorn Estimated OverheadBudgetDeluxe Setups Machine hours Parts 400 400 150,000100,000 1,600,000 1,200,000 800,000 450 $130,000 297,000 1,000,000 600 500 300,000 550 Compute the overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. (Round overhead cost per unit to 2 decimal places, e.g. 12.25 and cost assigned to 0 decimal places, e.g. 2,500.) Overhead cost per unit Budget s Deluxe fs per unit per unit

Explanation / Answer

STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity ACTIVITY COST POOL Measures Overheads Activity Rate Ordering Orders 130000 1000 130 per order Mchine setup Setup 297000 900 330 per setup Machining MH 1,000,000 250,000 4 per MH Assembly Parts 1,600,000 2,000,000 0.8 per part Inspection Inspections 300,000 1,000 300 per inspection Overheads Assigned BUDGET DELUXE Activity rate ACTIVITY AMOUNT ACTIVITY AMOUNT Ordering 130 600 78000 400 52000 Mchine setup 330 500 165000 400 132000 Machining 4 150000 600000 100000 400000 Assembly 0.8 1200000 960000 800000 640000 Inspection 300 550 165000 450 135000 TOTAL 1968000 1359000 Divide: Number of units 700,000 200,000 OH costy per unit 2.811429 6.795 OH cost per unit Budget 2.81 Deluxe 6.8

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