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Calculate the activity rate for each cost pool

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Reference no: EM131116039

Megan Industries manufactures several products including a basic case for a popular smart phone. The company is considering adopting an activity-based costing approach for setting its budget. The company's production activities, budgeted activity costs, and cost drivers for the coming year are as follows.

Activity Activity overhead $ Cost driver Cost driver quantity
Machine setup $217,600 # of setups 850
Inspection 149,930 # of quality tests 470
Materials receiving 177,620 # of purchase orders 1,660

The budgeted data for smart phone case production are as follows.


Direct materials $2.80 per unit
Direct labor $0.64 per unit
Number of setups 85
Number of quality tests 394
Number of purchase orders 61
Production 18,720 units

(a) Calculate the activity rate for each cost pool.

(b) Calculate the activity-based unit cost of the smart phone case.

Reference no: EM131116039

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