Reference no: EM132548651

Questions:

Question 1: How much overhead cost is allocated to product A and product B?

Question 2: What is the cost per unit of A and B?

Question 3: What is the selling price per unit of A and B, assuming a mark-up of 40% of cost.

A company has identified the following overhead costs and cost drivers for the coming year:

Overhead Item            Cost Driver              Budgeted Cost ($)                      Budgeted Activity Level

Machine set-up            No. of set-ups                  20,000                               200

Inspection               No. of inspections                130,000                           6,500

Materials handling        No. or material moves          80,000                          8,000

Engineering                   Engineering hours              50,000                          1,000

The following information was collected from the two products that were bring produced:

                                                                A                            B

Direct Materials                             $ 12,000             $ 8,000

Direct Labor                                    $ 2,000             $ 4,000

Units completed                                  50                      200

No. of set-ups                                      2                        4

No. of inspections                               10                       30

No. of material moves                           10                      50

Engineering hours                                 50                      10