Exercise 04-5 Assigning costs using ABC LO P3

Exercise 04-5 Assigning costs using ABC LO P3 Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go- karts Deluxe and Basic. Activity Handling materials Inspecting product Processing purchase orders Paying suppliers Insuring the factory Designing packaging Expected Costs $710,000 935,000 190,000 260,000 385,000 160.000 Expected Activity 100,000 parts 1,500 batches 700 orders 500 Invoices 40,000 square feet 2 models Assume that the following information is available for the company's two products for the first quarter of this year. Deluxe Model Basic Model Production volume 10,000 units 30,000 units Parts required 20,000 parts 30,000 parts Batches made 250 batches 100 batches Purchase orders 50 orders 20 orders Invoices 50 invoices 10 invoices Space occupied 10,000 sq. ft. 7,000 sq.ft Models 1 model 1 model Required: Compute activity rates for each activity and assign overhead costs to each product model using activity based costing (ABC) What is the overhead cost per unit of each model? (Round activity rate and average OH cost per unit answers to 2 decimal places.) Activity Rate Cost driver quantity incurred OH Allocated Deluxe Activity Handling materials Inspecting product Processing orders Paying suppliers Insuring factory Designing packaging Activity Rate Cost driver quantity incurred OH Allocated 10 Basic Activity Handling materials Inspecting product Processing orders Paying suppliers Insuring factory Designing packaging 0 0 0 0