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		300
Ordering materials	28,000		Number of orders		11,400
Machining	150,000		Machine hours		10,000
Receiving	24,500		Receiving hours		6,200

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

		Model X		Model Y
Units completed		4,800		6,000
Number of setups		300		50
Number of orders		5,800		4,350
Machine hours		300		660
Receiving hours		20,400		8,600

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	%