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Waterway is an electronics components manufacturer. Information about the companys two products follows: AM-2 FM-9 Units produced 20,000 4,000 Direct labor hours required for production

Waterway is an electronics components manufacturer. Information about the company’s two products follows:

AM-2

FM-9

Units produced

20,0004,000

Direct labor hours required for production

10,00015,000

Units per batch

4,000400

Shipping weight per unit

0.50lbs.10lbs.


The company incurs $814,000 in overhead per year and has traditionally applied overhead on the basis of direct labor hours.

(a)

Correct answer iconYour answer is correct.

(i)How much overhead will be allocated to each product using the traditional direct labor hours allocation base? (Round per unit rates to 2 decimal places, e.g. 3.54 and final answers to 0 decimal places, e.g. 45,000.)

AM-2

FM-9

Overhead allocated to each product

$enter a dollar amount rounded to 0 decimal places$enter a dollar amount rounded to 0 decimal places

(ii)What overhead cost per unit will be allocated to each product? (Round answers to 2 decimal places, e.g. 15.25.)

AM-2

FM-9

Overhead cost per unit

$enter a dollar amount rounded to 2 decimal places$enter a dollar amount rounded to 2 decimal places

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(b)

Assume that Waterway has identified three activity cost pools.

Pool

Cost

Cost Driver

Assembly

$575,000Direct labor hours

Setup

39,000Number of setups (1 per batch)

Packaging

200,000Weight

(i)Given these activity pools and cost drivers, how much overhead should be allocated to each product? (Round per unit rates to 2 decimal places, e.g. 3.54 and final answers to 0 decimal places, e.g. 45,000.)

AM-2

FM-9

Total allocated overhead

$enter a dollar amount rounded to 0 decimal places$enter a dollar amount rounded to 0 decimal places

(ii)What overhead cost per unit will be allocated to each product? (Round answers to 2 decimal places, e.g. 15.25.)

AM-2

FM-9

Overhead cost per unit

$enter a dollar amount rounded to 2 decimal places$enter a dollar amount rounded to 2 decimal places


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