Chapter $4$

Using Excel for allocating manufacturing overhead with activity$-$based costing $($ABC$)$

Fremont Cookies has been baking coconut cookies for $27$ years. Fremont makes two types of cookies, regular and premium.

Cookies are sold to other commercial businesses and premium cookies are made$-$to$-$order in batches based on customer

orders$/$jobs

Fremont Troll House Cookies produces regular coconut cookies that sell for $$6\mathrm{.}00$ and a premium cookies that sell for $$8\mathrm{.}00.$

In $2023,$ total overhead costs of $$125,000$ were allocated based on machine hours. A total of $1,225$ machine hours were

required last year to make $16,250$ regular Cookies $(7$ min per cookie$),$ and $825$ machine hours were required to make $8,500$

premium Cookies $(9$ min per cookie$).$ Total direct labor and direct materials costs for last year were as follows:

The management of Fremont Troll House Cookies would like to use activity$-$based costing to allocate overhead rather than

one plantwide rate based on machine hours. The following estimates are for the activities and related cost drivers identified as

having the greatest impact on overhead costs:

Required:

Calculate the direct materials cost per unit and direct labor cost per unit for each product for $2023.$