Question

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.

Model	Annual Sales in Units
High F	10,200
Great P	16,200

National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:

	High F			Great P
Direct materials	$	38.20		$	25.60
Direct labor	$	17.80		$	13.40

Budget factory overhead:
Engineering and Design	2,440	engineering hours	$	402,600
Quality Control	12,870	inspection hours		295,780
Machinery	33,750	machine hours		607,320
Miscellaneous Overhead	26,430	direct labor hours		158,520
Total			$	1,464,220

National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:

	High F	Great P
Engineering and design hours	980	1,460
Quality control inspection hours	5,660	7,210
Machine hours	20,300	13,450
Labor hours	12,020	14,410

Using activity-based costing, total overhead per unit of the High F model is: (Rounded to the nearest cent.)

Multiple Choice

$165.00.

$45.37.

$65.38.

$71.49.

$49.22.

Answer 1

The correct answer is $ 71.49

Note:

	Activity			Cost	Activity Rate ( Cost / Activity)	Activity High F	Overhead ( Activity High F * Activity rate)
Engineering and Design	2,440	engineering hours	$	4,02,600	165.000000000000000	980	1,61,700.00000000000
Quality Control	12,870	inspection hours		2,95,780	22.982128982129000	5660	1,30,078.85003885000
Machinery	33,750	machine hours		6,07,320	17.994666666666700	20300	3,65,291.73333333300
Miscellaneous Overhead	26,430	direct labor hours		1,58,520	5.997729852440410	12020	72,092.71282633370
Total				Total Overhead			7,29,163.29619851700
				Total Units of High F			10200
				overhead per unit of the High F model			71.48659767