Question

Do It! Review 17-02 ac Flynn Industries has three activity cost pools and two products. It estimates production 2.000 units of Product BC113 and 1,000 of Product ADSOB. Having identified its activity cost pools and the cost drivers for each pool Flynn accumulated the following data relative to those activity cost pools and cost drivers Annual Overhead Data Activity Cost Pools Machine setup Machining Packing Cost Drivers Setups Machine hours Orders Estimated Overhead $15,600 86,190 30,250 Estimated Use of Cost Drivers per Product Estimated Use of Cost Product Product Drivers per Activity BC113 AD908 392910 5,070 1,080 3,990 550 200350 Using the above data, do the following: Prepare a schedule showing the computations of the activity-based overhead rates per cost drives Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers per Activity Activity-Based Overhead Rates Machine setup setups per setup Machining machine hours per machine hr per order Packing

Answer 1

Solution 1:

Determination of activity rate for each activity
Activity	Estimated Overhead Cost	Activity Base	Usage of Activity Base	Activity Rate
					Machine Setup	$15,600.00	Setups	39	$400.00
Machining	$86,190.00	Machine hours	5070	$17.00
Packing	$30,250.00	Orders	550	$55.00

Solution 2 & 3:

Allocation of overhead and computation of overhead cost per unit
Activity	Estimated Overhead Cost	Activity Base	Usage of Activity Base	Activity Rate	BC113		AD908
					Usage	Allocated Costs	Usage	Allocated Costs
Machine Setup	$15,600.00	Setups	39	$400.00	29	$11,600	10	$4,000
Machining	$86,190.00	Machine hours	5070	$17.00	1080	$18,360	3990	$67,830
Packing	$30,250.00	Orders	550	$55.00	200	$11,000	350	$19,250
Total	$132,040.00					$40,960		$91,080
Nos of units						2000		1000
Overhead cost per unit						$20.48		$91.08