Exercise $17-19($Algo$)$ Activity$-$based costing to compute activity rates, overhead cost per unit, and product cost per unit LO P$3$

Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data.

Rounded Edge Squared Edge Total

Direct materials $ $36,600$ $ $48,600$ $ $85,200$

Direct labor $12,20032,40044,600$

Overhead $($using plantwide rate$)43,20082,400125,600$

Total product cost $ $92,000$ $ $163,400$ $ $255,400$

Units produced $12,20016,200$

Product cost per unit $ $7\mathrm{.}54$ $ $10\mathrm{.}09$

Northwest$$s controller wants to apply activity$-$based costing to allocate the $$125,600$ of overhead cost to the two products to see whether product cost per unit would change markedly from that above. The company$$s budgeted activity usage equals its actual activity usage for the period. The following additional information is collected.

Activity Budgeted Cost Activity Cost Driver Activity Usage

Rounded Edge Squared Edge Total

Purchasing $ $6,500$ Purchase orders $164$ orders $486$ orders $650$ orders

Depreciation of machinery $65,400$ Machine hours $500$ hours $1,500$ hours $2,000$ hours

Setup $53,700$ Setups $40$ setups $210$ setups $250$ setups

Total $ $125,600$

Required:

Compute the activity rate for each activity using activity$-$based costing.

Compute overhead cost per unit for each of the two products using activity$-$based costing.

Determine product cost per unit for each of the two products using activity$-$based costing.