Activity Budgeted Cost Activity Driver

Machine setup $ $14,000(20$ machine setups$)$

Parts handling $11,200(16,000$ parts$)$

Quality inspections $16,800(100$ inspections$)$

Total budgeted overhead $ $42,000$

Unit Information Product A Product B

Units produced $1,400$ units $280$ units

Direct materials cost $ $24$ per unit $ $34$ per unit

Direct labor cost $ $44$ per unit $ $54$ per unit

Direct labor hours $2$ per unit $2\mathrm{.}50$ per unit

Using a plantwide overhead rate based on $3,500$ direct labor hours, compute the total product cost per unit for each product.

Consider the following additional information about these two products. If activity$-$based costing is used to allocate overhead cost,

$($a$)$ compute overhead activity rates,

$($b$)$ allocate overhead cost to Product A and Product B and compute overhead cost per unit for each, and

$($c$)$ compute product cost per unit for each.

Actual Activity Usage Product A Product B

Setups $8$ setups $12$ setups

Parts $10,000$ parts $6,000$ parts

Inspections $40$ inspections $60$ inspections