Question

The Dawson Company manufactures small lamps and desk lamps. The following shows the activities per product...

The Dawson Company manufactures small lamps and desk lamps. The following shows the activities per product and the total overhead information:

Setups Inspections Assembly (dlh)
Small Lamps - 3,600 units 3,500 9,600 44,400
Desk Lamps - 9,500 units 7,000 16,000 44,400
Activity Pool Activity Base Budgeted Amount
Setups 10,500 $98,700
Inspections 25,600 $133,120
Assembly (dlh) 77,700 $380,730

Calculate the overhead per unit to be charged to small lamps.

$58.41

$116.82

$83.44

$141.85

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Answer #1
Activity pool

Activity rate

[ Budgeted amount / Activity base ]
Setups

9.4

[ 98700/10500 ]

Per setup
Inspection

5.2

[ 133120/25600 ]

Per inspection
Assembly (dlh)

4.9

[ 380730/77700 ]

Per dlh
Calculation of overhead allocated to small lamps :

Activity pool

Overhead allocated

[ Activity base of small lamps * Activity rate ]
Setups

32900

[ 3500*9.4 ]
Inspection

49920

[ 9600*5.2 ]
Assembly (dlh)

217560

[ 44400*4.9 ]
Total overhead allocated 300380
Overhead per unit charged to small lamps = Total overhead charged to small lamps / Number of units = 300380/3600 $    83.44
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