Question

# Sheridan Industries has three activity cost pools and two products. It estimates production 2,000 units of...

Sheridan Industries has three activity cost pools and two products. It estimates production 2,000 units of Product BC113 and 1,000 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Sheridan accumulated the following data relative to those activity cost pools and cost drivers.
 Annual Overhead Data Estimated Use of Cost Drivers per Product Activity Cost Pools Cost Drivers Estimated Overhead Estimated Use of Cost Drivers per Activity Product BC113 Product AD908 Machine setup Setups \$27,000 45 28 17 Machining Machine hours 109,560 4,980 1,180 3,800 Packing Orders 26,950 490 140 350

Using the above data, do the following:
Prepare a schedule showing the computations of the activity-based overhead rates per cost driver.
 Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers per Activity Activity-Based Overhead Rates Machine setup \$ setups \$ per setup Machining machine hours \$ per machine hr. Packing orders \$ per order \$
Prepare a schedule assigning each activity’s overhead cost to the two products.
 BC113 AD908 Activity Cost Pools Estimated Use of Cost Drivers per Product Activity-Based Overhead Rates Cost Assigned Estimated Use of Cost Drivers per Product Activity-Based Overhead Rates Cost Assigned Machine setup \$ \$ \$ \$ Machining \$ \$ Packing \$ \$ Total assigned costs \$ \$
Compute the overhead cost per unit for each product. (Round answers to 2 decimal places, e.g. 12.25.)

Req.1

Activity Cost Pools Estimated Overhead( A) Expected Use of Cost Drivers per Activity(B Activity-Based Overhead Rates( A÷B)
Machine setup \$27,000 45 setups \$600 per setup
Machining \$109,560 4980 machine hours \$22 per machine hr.
Packing \$26,950 490 order \$55 Per order

Req.2

Activity Cost Pools Estimated use of Cost driver( a) Activit based overhead rates(b) Cost Assigned(a ×b) Estimated use of Cost driver(c) Activit based overhead rates(d) Cost Assigned(c×d)
Machine setup 28 \$600 \$16,800 17 \$600 \$10,200
Machining 1180 \$22 \$25,960 3800 \$22 \$83,600
Packing 140 \$55 \$7700 350 \$55 \$19,250
Total assigned Costs \$50,460 \$113,050

Req.3

 BC113 AD908 Overhead Cost Per Unit ( a÷ b) \$25.23 \$113.05 Total Cost ( a) \$50,460 \$113,050 No of Units ( b) 2000 1000

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