Question

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. ModelAnnual Salesin UnitsHigh F10,800Great P16,800 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 FGreat PDirect materials$38.80 $26.20 Direct labor$18.40 $14.00 Budget factory overhead: Engineering and Design2,560engineering hours$409,600 Quality Control12,990inspection hours 271,320 Machinery33,870machine hours 540,800 Miscellaneous Overhead26,550direct labor hours 132,400 Total $1,354,120 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 FGreat PEngineering and design hours1,0401,520Quality control inspection hours5,7207,270Machine hours20,36013,510Labor hours12,08014,470

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

Answer 1

Activity cost per unit of Great P Model
Activity		Total Cost	Drivers	Activity	Great P
				rate	Driver	Oh cost
Engieering design	409600	2560	160	1520	243200
Quality control	271320	12,990	20.89	7270	151870.3
Machining	540800	33870	15.97	13510	215754.7
Misc. overhead	132400	26550	4.99	14470	72205.3
			Total activity cost		683030
			Divide: Units		16800
			OH cost per unit		40.66