Question

# Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next...

Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 790,000 units are expected to be produced taking 0.75 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

 Estimated: Department 1 Department 2 Manufacturing overhead costs \$ 3,145,500 \$ 1,577,000 Direct labor hours 169,000 DLH 269,000 DLH Machine hours 269,000 MH 194,000 MH

Multiple Choice

• \$10.78 per unit

• \$7.65 per unit

• \$5.21 per unit

• \$11.69 per unit

• \$10.20 per unit

• A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

 Budgeted Activity Activity Cost Pool Budgeted Cost Product A Product B Activity 1 \$ 95,000 3,800 3,600 Activity 2 \$ 70,000 5,300 6,300 Activity 3 \$ 109,000 3,300 6,050

Annual production and sales level of Product A is 35,100 units, and the annual production and sales level of Product B is 70,350 units. What is the approximate overhead cost per unit of Product A under activity-based costing?

Multiple Choice

• \$1.87

• \$3.40

• \$2.20

• \$10.28

• \$12.84

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

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