Question

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

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