Question

Flynn Industries has three activity cost pools and two products. It estimates production 2,000 units of Product BC113 and 1,000 of Product AD908. 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 Estimated Overhead $17,500 120,750 28,670 Activity Cost Pools Machine setup Machining Packing 20 Estimated Use of Cost Drivers per Product Estimated Use of Cost Product Product Drivers per Activity BC113 AD908 35 4,830 1,140 3,690 470 120 350 Cost Drivers Setups Machine hours Orders 15 Using the above data, do the following: Prepare a schedule showing the computations of the activity-based overhead rates per cost driver. 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. Packing orders per order

Answer 1

Activity Rate = Overheads/Total Activity
Cost Pool	Estimated Overhead	Total Activity	Rate
Machine Setup	17,500	35	500	per setup
Machining	120,750	4,830	25	per machine hour
Packing	28,670	470	61	per order
Total	166,920
Overhead assigned = Activity rate*Activity consumed
	BC113	AD908
Cost Pool	Estimated Use	Rate	Cost Assigned	Estimated Use	Rate	Cost Assigned
Machine Setup	20	500	10,000	15	500	7,500
Machining	1,140	25	28,500	3,690	25	92,250
Packing	120	61	7,320	350	61	21,350
	Total		45,820			121,100
	Number of units		2,000			1,000
	Overheads per unit		22.91			121.1