Answer:
Overhead Rate:
Materials handling = $ 37
Machine setups = $ 54
Quality inspections = $48
Instruments Gauges
Total Cost Assigned $ 40,410 48,150
Overhead Cost per Unit $ 824.69 162.12
Step-by-step explanation:
The overhead rate for each activity can be calculated by dividing the estimated overhead cost by the total number of cost drivers.
Material Handling:
Total Cost = $38,850
Cost Driver = Number of Requisitions = 1050
Overhead Rate = 38850/1050 = $37
Machine Setups:
Total Cost = $26,190
Cost Driver = No. of setups = 485
Overhead Rate = 26190/485 = $54
Quality Inspections:
Total Cost = $23520
Cost Driver = No. of inspections = 490
Overhead Rate = 23520/490 = $48
The total cost assigned for each of the products i.e. Instruments and Gauges can be calculated by multiplying the overhead costs with each of the cost drivers separately and then adding the costs to find the total cost.
Total Cost Assigned for Instruments:
Cost Assigned for Material Handling = No. of Instruments x Overhead Cost
= 420 x 37
Cost Assigned for Material Handling = $15,540
Cost Assigned for Machine Setups = No. of Instruments x Overhead Cost
= 225 x 54
Cost Assigned for Machine Setups = $12,150
Cost Assigned for Quality Inspections = No. of Instruments x Overhead Cost
= 265 x 48
Cost Assigned for Quality Inspections = $12,720
Total Cost Assigned for Instruments = $15,540 + $12,150 + $12,720
Total Cost Assigned for Instruments = $40,410
Overhead Cost Per Unit for Instruments = Total Cost Assigned/No. of Instruments Produced
= $40,410/49
Overhead Cost Per Unit for Instruments = $824.69
Similarly, we will calculate the total cost assigned and the overhead cost per unit for gauges produced in April.
Total Cost Assigned for Gauges:
Cost Assigned for Material Handling = No. of Gauges x Overhead Cost
= 630 x 37
Cost Assigned for Material Handling = $23,310
Cost Assigned for Machine Setups = No. of Gauges x Overhead Cost
= 260 x 54
Cost Assigned for Machine Setups = $14,040
Cost Assigned for Quality Inspections = No. of Gauges x Overhead Cost
= 225 x 48
Cost Assigned for Quality Inspections = $10,800
Total Cost Assigned for Gauges = $23,310 + $14,040 + $10,800
Total Cost Assigned for Gauges = $48,150
Overhead Cost Per Unit for Gauges = Total Cost Assigned/No. of Gauges Produced
= $48,150/297
Overhead Cost Per Unit for Gauges = $162.12
