Question

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.)

		BC113		AD908
Overhead cost per unit		$		$

Answer 1

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