Question

Daston Company manufactures two products, Product F and Product G. The company expects to produce and sell 2,350 units of Product F and 2,250 units of Product G during the current year. Data relating to the companyâs three activity cost pools are given below for the current year:

Total Activity
Activity Cost Pools Total Cost Product F Product G Total
Machine setups $30,771 124 setups 139 setups 263 setups
Purchase orders $188,360 780 orders 1,990 orders 2,770 orders
Order size $114,880 3,120 hours 4,060 hours 7,180 hours

Required:
Using the activity-based costing approach, determine the overhead cost per unit for each product. (Round your answers to 2 decimal places.)

Answer 1

Answer and Explanation:

The computation is shown below:

But before that the activity rate is

Activity cost pools      Total       Total      Activity rate

Machine setups          $30,771     263    $117

Purchase orders        $188,360   2,770  $68

Order size                  $114,880   7,180   $16

Now the overhead cost per unit is

Particulars              Product G      Product F

Machine setup        $14,508        $16,263

                      (124 × $117)                (139 × $117)

Purchased orders $53,040         $135,320

                   (780 ×  $68)                (1,990 × $68)

Order size       $49,920                $64,960

                 (3,120 × $16)          (4,060 × $16)

Total overhead  $117,468         $216,543

Units                   2,350                2,250

Overhead cost

per unit             $49.98              $96.24