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Do It! Review 17-2 Flynn Industries has three activity cost pools and two produc

ID: 2552813 • Letter: D

Question

Do It! Review 17-2 Flynn Industries has three activity cost pools and two products. It expects to produce 3,000 units of Product BC113 and 1,500 of Product AD908. aving identified its activity cost pools and the cost drivers for each pool, Flynn accumulated the following data relative to those activity cost pools and cost drivers Expected Use of Cost Drivers per Product Annual Overhead Data Product Estimated Overhead $16,000 110,000 30,000 Expected Use of Cost Product Activity Cost Pools Machine setup Machining Packing Cost Drivers Setups Machine hours Orders Drivers per Activity BC113 AD908 15 4,000 350 40 5,000 500 25 1,000 150 Using the above data, do the following: Prepare a schedule showing the computations of the activity-based overhead rates per cost driver. Expected Use of Cost Drivers per Activity Activity-Based Overhead Rates Activity Cost Estimated Pools Overhead setups Machine setup Machining Packing per setup per machine hr. per order achine hours orders

Explanation / Answer

Answer:

1

Activity

Cost

Estimated

Total

Overhead

cost

Drivers

total

Drivers

rates

pools

overhead

per driver

Machine set up

Set up

$16,000

40 set up

$400

Machining

Machine hours

$110,000

5,000 M. Hr.

$22

Packaging

Orders

$30,000

500 order

$60

Total:

156,000

$482

___________________________________________________________________________

2

Activity

Cost

Rate

Total

Cost

Total

Cost

cost

per cost

per

drivers

Assigned

drivers

Assigned

pools

driver

cost

for

to

for AD 908

to AD 908

driver

BC 113

BC 113

Set up

Set up no.

$400

25

$10,000

15

$6,000

Machining

M/C hour

$22

1,000

$22,000

4,000

$88,000

Packing

Orders

$60

150

$9,000

350

$21,000

Total

$41,000

$115,000

Devided by
Quantity

3,000

1,500

Cost per unit

$13.67

$76.67

BC 113

AD 908

Overhead rates per unit

$13.67

$76.67

Activity

Cost

Estimated

Total

Overhead

cost

Drivers

total

Drivers

rates

pools

overhead

per driver

Machine set up

Set up

$16,000

40 set up

$400

Machining

Machine hours

$110,000

5,000 M. Hr.

$22

Packaging

Orders

$30,000

500 order

$60

Total:

156,000

$482

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