Activity Based Costing: Jordan, Inc. has five activity cost pools and two produc

Question

Activity Based Costing: Jordan, Inc. has five activity cost pools and two products (a budget tape rewinder and a deluxe tape rewinder). Information is presented below: Activity Cost Pool Ordering and Receivin Machine Setup Machining Assembly Inspection Cost Drivers by Product Deluxe 400 400 100,000 1,200,0001,200,000800,000 450 udget 600 500 150,000 Est. Overhead S110,000 ers 297,000 Setups Machine hours1,000,000 Parts Inspections 300,000 550 Instructions Compute the overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. Round your answer to the nearest cent.

Explanation / Answer

Activity Cost Pool Est. Overhead Total Est. Activity Overhead Rate Ordering and Receiving 110000 1000 110 Machine Setup 297000 900 330 Machining 1000000 250000 4 Assembly 1200000 2000000 0.6 Inspection 300000 1000 300 Budget Deluxe Activity Cost Pool Activity Overhead assigned Activity Overhead assigned Ordering and Receiving 600 66000 400 44000 Machine Setup 500 165000 400 132000 Machining 150000 600000 100000 400000 Assembly 1200000 720000 800000 480000 Inspection 550 165000 450 135000 Total 1716000 1191000 Units 700000 200000 Overhead cost per unit 2.45 5.96

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