Managerial Accounting Ch5.

Problem 3, Actitity Based Costing, worth 10 points, plus 5 points extra credit: Baxter Company has two products: Big and Little. It uses Activity Based Costing and has prepared the analysis below that activity for each of its three activity cost pools. Using the analysis below, you are to do the following A. Compute the approximate overhead cost to be expected for Big Product under ABC. B. Compute the approximate overhead cost to be expected for Little Product under ABC. C. For an additional 5 points extra credit, calculate the cost per unit for just the Big Product assuming that 62,525 units are expected to be produced. Assume that direct materials will cost $5.00 and direct labor will cost $3.50 per unit. 1 | Activity Cost Pool Activity 1 1 Activity 2 Activity 3 Budgeted Activity 1 Budgeted MOH Cost Big Product Little Product 7 2,000.00 1,200.00 2,800.00 91,000.00 5,250.00 1.750.00 8 8,000.00 3,200.00 4,800.00 A. Big Product Little Product Extra Credit