1 E18.9 Compute overhead rates and assign overhead using ABC 2 Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 3 50 range instruments and 300 pressure gauges were produced, and overhead costs of $94,500 were estimated. An 4 analysis of estimated overhead costs reveals the following activities. 5 6 Activities Cost Drivers Total Cost 1. Materials handling Number of requisitions $40,000 2. Machine setups Number of setups 21,500 3. Quality inspections Number of inspections 33,000 10 $94,500 7 8 9 12 The cost driver volume for each product was as follows. 13 14 Cost Drivers Instruments Gauges Total 15 Number of requisitions 400 600 1,000 16 Number of setups 200 300 500 17 Number of inspections 200 400 600 18 19 Instructions 20 (a) Determine the overhead rate for each activity 21 (b) Assign the manufacturing overhead costs for April to the two products using activity-based costing 22 and compute the overhead cost per unit. 23 24 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" 25 26 Ch18-ACC202E1B 4 Bone Lutour Data Formulas Review View Tell me Draw Insert Page Layout ome III 11 Wap Text Gene Calibri (Body) Merge & Center M C D G NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". al The overhead rates are: Activity Cost Pools Material Handling Machine Setups Quality inspections Estimated Overhead Value Value Value 7 Expected Use of Cost Driver Activity Value Value Value Activity-Based OH Rates 2 requisition ? setup ? / Inspection b) Gauges 3 The assignment of overhead costs to products is as follows: Instruments Cost Driver Number Cost Requisitions Value 7 Machine setups Value 2 2 Inspections Value Total costs asigned 2 Number Value Value Value Cost 2 ? 2 ? Cost Assigned 7 7 ? 2 1 2 3 Value Units produced 15 Value 2 ? OH cost per unit 37 8 50 52 53 54 55 $6 57 58 59 60 61 62 63 64 + HW Problem E18-4 Bonus Problem E18.9 Select destination and press ENTER or choose Paste