Question

A company has two products: standard and deluxe. The company expects to produce 37,775 standard units and 63,640 deluxe units. It uses activity-based costing and has prepared the following analysis showing budgeted cost and cost driver activity for each of its three activity cost pools.

				Budgeted Activity of Cost Driver
Activity Cost Pool	Budgeted Cost			Standard			Deluxe
Activity 1	$	103,850			2,500		5,250
Activity 2	$	106,000			4,500		5,500
Activity 3	$	95,120			3,000		2,800

   
Required:
1. Compute overhead rates for each of the three activities.
2. What is the expected overhead cost per unit for the standard units?
3. What is the expected overhead cost per unit for the deluxe units?
(Round activity rate and cost per unit answers to 2 decimal places.)

Activity	Expected Costs	Expected Activity Driver	Activity Rate
1	$103,850
2	106,000
3	95,120
Standard
Activity	Activity Driver	Activity Rate	Allocated Cost
1
2
3
Deluxe
Activity	Activity Driver	Activity Rate	Allocated Cost
1
2
3
			0

Answer 1

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