Exercise 4.21 (Algorithmic) Approximately Relevant ABC

Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year:

Activity	Expected Cost		Activity Driver	Activity Capacity
Setting up equipment	$138,000		Number of setups		200
Ordering materials	27,000		Number of orders		10,200
Machining	138,000		Machine hours		11,000
Receiving	24,000		Receiving hours		7,000

Silven produces two models of cell phones with the following expected activity demands:

		Model X		Model Y
Units completed		6,000		6,400
Number of setups		300		100
Number of orders		6,600		4,000
Machine hours		310		620
Receiving hours		20,900		9,200

Required:

1. Determine the total overhead assigned to each product using the four activity drivers.

	Total Overhead Assigned
Model X	$
Model Y	$

2. Determine the total overhead assigned to each model using the two most expensive activities. The costs of the two relatively inexpensive activities are allocated to the two expensive activities in proportion to their costs.

Do not round interim computations. Round your final answers to the nearest dollar.

	Total Overhead Assigned
Model X	$
Model Y	$

3. Using ABC as the benchmark, calculate the percentage error. Enter as a one-decimal percent, e.g. .0975 should be entered as 9.8.

	Percentage Error
Model X	%
Model Y	%