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

		AM-2		FM-9
Units produced		20,000		4,000
Direct labor hours required for production		10,000		15,000
Units per batch		4,000		400
Shipping weight per unit		0.50	lbs.	10	lbs.

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		$575,000		Direct labor hours
Setup		39,000		Number of setups (1 per batch)
Packaging		200,000		Weight

(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

Answer rating: 100% (QA)

A 1 Estimated overhead cost 814000 Total direct labour hours direct labour hoursof Am2 direct labour hours of fm9 10000 hours 15000 hours 25000 hours ... View the full answer