Case 1 (20 Marks)

Super Tools Pty Ltd has five activity cost pools and two products.It expects to produce 200,000 units of its automobile scissors jack and 80,000 units of its truck hydraulic jack. Having identified its actitivy cost pools and the cost drivers for each cost pool, Super tools Pty Ltd accumulated the following data relative to those activity cost pools and cost drivers.

Annual overhead data

Activity cost pools Cost drivers Estimated overhead

Ordering and receiving Purchase orders. $200,000

Machine setup. Setups. $600,000

Machining Machine hours $2,000,000

Assembling Parts $1,800,000

Inspecting and testing Tests $700,000

Total $5,300,000

Expected use of cost drivers per product

Expected use of cost Scissors Jacks Hydraulic Jacks

driver per activity

2,500 orders 1,000 1,500 1,200 orders 500 700

800,000 hours 300,000. 500,000

3,000,000 parts 1,800,000 1,200,000

35,000 tests 20,000 15,000

Using the above data, do the following

a) Prepare a schedule showing the computation of the activity-based costing overhead rate per cost driver (5 Marks).

b) Prepare a schedule assigning each activity's overhead cost to the two products (5 Marks).

c) Compute and describe the overhead cost per unit for each product (5 Marks).

d) Explain the comparative overhead cost per unit (5 Marks).