Question

Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April,  50 range...


Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April,  50 range instruments and 200 pressure gauges were produced, and overhead costs of $ 85,150 were estimated. An analysis of estimated overhead costs reveals the following activities.

Activities

Cost Drivers

Total Cost

1. Materials handling Number of requisitions

$ 33,495

2. Machine setups Number of setups

27,645

3. Quality inspections Number of inspections

24,010

$ 85,150


The cost driver volume for each product was as follows.

Cost Drivers

Instruments

Gauges

Total

Number of requisitions 385 630 1,015
Number of setups 185 300 485
Number of inspections 260 230 490

Determine the overhead rate for each activity.

Overhead Rate

Materials handling

$ enter a dollar amount per requisition

per requisition
Machine setups

$ enter a dollar amount per setup

per setup
Quality inspections

$ enter a dollar amount per inspection

per inspection

eTextbook and Media

Assign the manufacturing overhead costs for April to the two products using activity-based costing. (Round per unit answers to 2 decimal places, e.g. 12.25.)

Instruments

Gauges

Total cost assigned

$ enter a dollar amount rounded to 2 decimal places

$ enter a dollar amount rounded to 2 decimal places

Overhead cost per Unit

$ enter a dollar amount rounded to 2 decimal places

$ enter a dollar amount rounded to 2 decimal places

Homework Answers

Answer #1
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Overhead rate for each activity
Activities Cost Drivers Total Cost Total Cost Drivers Overhead Rate
               1 Materials handling Number of requisitions $      33,495                       1,015 $               33.00 per requisition
               2 Machine setups Number of setups $      27,645                          485 $               57.00 per setup
               3 Quality inspections Number of inspections $      24,010                          490 $               49.00 per inspection
Total $      85,150
Instruments Guage
Activities Overhead Rate Cost Drivers Cost Cost Drivers Cost
Materials handling $                                 33                385 $                 12,705                      630 $           20,790
Machine setups $                                 57                185 $                 10,545                      300 $           17,100
Quality inspections $                                 49                260 $                 12,740                      230 $           11,270
Total Manufacturing overhead Cost assigned $                 35,990 $           49,160
No of Units                       50.00               200.00
Cost per unit $                 719.80 $           245.80
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