Question: Management is considering using activity-based costing to assign manufacturing overhead cost to products. The activity-based costing system would have the following four activity cost pools:

Management is considering using activity-based costing to assign manufacturing overhead cost to products. The activity-based costing system would have the following four activity cost pools:

Expected Annual Activity

Activity drivers

LaserEye

Hurricane

Number of part types

600

900

Number of purchase orders

2000

800

Number of test runs

500

1750

Machine hours

1600

8400

Activity cost pool

Activity drivers

Estimated overhead costs

Maintaining parts inventory

Number of part types

$225,000

Processing purchase orders

Number of purchase orders

$182,000

Quality control

Number of test runs

$45,000

Machine related

Machine hours

$460,000

Required: Using activity-based costing compute the unit product cost of each product.

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