Crane makes two products, Simple and Complex. As their names suggest, Simple is the more basic product, and Complex comes withUsing the activity$-$based costing rates,

allocate overhead cost to the products.

show that the overhead assigned to each product sums to the total company overhead.

determine the overhead cost per unit for each product.

$($Round per unit answers to $2$ decimal places, e$.$g$.15\mathrm{.}25.)$

all the bells and whistles. The company has always allocated overhead costs to products based on machine hours. Last year, the

company implemented an activity$-$based costing system, and managers determined the following activity pools and rates based on

total overhead of $$2,200,000$ :

Rate

Assembly $,$$$0\mathrm{.}80$ per direct labor hour

Fabrication $$15$ per machine hour

Setups $$20$ per batch

Bonding $$152,000$ direct to Complex

Only the Complex product requires bonding, so all the costs of bonding should be allocated to Complex. The following data relate to

both products.

$($a$)$

Your Answer Correct Answer

Your answer is correct.

Using the traditional method of allocating overhead costs,

allocate overhead cost to the products.

show that the overhead assigned to each product sums to the total company overhead.

determine the overhead cost per unit for each product.

$($Round overhead rate and overhead per unit answers to $2$ decimal. places, e$.$g$.15\mathrm{.}25.)$

Solution