Reference no: EM132067526

Currambine Pty Ltd manufactures two products, Product C and Product D. In the current year Currambine produced 4,000 units of Product C and 2,000 units of Product D. The Company uses normal costing and activity-based costing (ABC) to allocate overheads. The following are the budgeted activity rates calculated for its three (3) activities: Activity Activity rate Machine set-ups $50 Design $60 General factory $9 Actual data relating to these activities for the current period are given below: Activity Cost Pool Actual Overhead Costs Actual Activity Product C Product D Total Machine set-ups $ 13,630 100 190 290 Design 113,750 500 1,250 1,750 General factory 68,860 4,160 2,100 6,260 $196,240

Required: 1. Calculate the unit manufacturing overhead cost for each product. 2. a. Classify each of the activity according to the cost hierarchy level; and b. specify a possible allocation base/ cost driver.

Activity

a. Cost Hierarchy Level

b. Allocation base/ cost driver

1. Machine set-ups

2. Design

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Question 2 contd.

3. Calculate for each activity and in total: a. The amount of overheads over or underallocated, b. specifying clearly whether the amount is over or under allocated