Air United, Inc. manufactures tvo products: missils range instruments and spacep

Question

Air United, Inc. manufactures tvo products: missils range instruments and spacepressure gauges. During April, 49 range inscruments and 296 pressure gauges waare produced, and overhead costs of $81,470 wre t mated. An analysia of estimated ovarhead coats ravsala the follawing activities Aclivilies Cost Drivers Total Cost Number of requisitions Number of setups Number of inspections 31.350 28.280 21.840 591.470 Naterials handing 2 Nechine setups 3. Quality inspections The cozt driver volume for cach produca a follows Instruments Gauges Total Numbar of raquiaitiona Number of sstups Number of inspections 625 1,045 255 265 520 Determine the overheed rate for esch activity Overhead Rate Nacarials handing Nachine setups s Quelity inspectionss Assign the manufecturing overhead co for April to the two products using activity-based cosing. (Round per unit answers to 2 decimmal places, e.g. 12.25.) Total cost assigned Overhesd cost per Unit

Explanation / Answer

1 Determination of Overhead rate for each activity Activity Overheads Cost Cost Driver Cost driver volume Overhead rate Material Handling 31,350 Number of requisitions 1045 30.00 Machine Setups         28,280 Number of setups 505 56.00 Quality inspections         21,840 Number of inspections 520 42.00 Overhead Rate = Overhead Cost/Cost driver volume 2 Assign of manufacturing overhead to two products using activity based costing Instruments Gauges Material Handling            12,600 18,750 420 X 30 625 X 30 Machine Setups            10,360 17,920 185 X 56 320 X 56 Quality inspections            10,710 11,130 255 X 42 265 X 42 Total Cost assigned 33,670 47,800 Units Produced 49 296 Overhead cost per Unit 687.14 161.49

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