Question

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

Answer 1

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