No. 1: Activity Based Costing

Casey Company has five activity cost pools and two products. It expects to produce 200,000 units of its automobile scissors jack and 80,000 units of its truck hydraulic jack. Having identified its activity cost pools and the cost drivers for each cost pool, Casey Company accumulated the following data relative to those activity cost pools and cost drivers.

Casey Company has five activity cost pools and two products. It expects to produce 200,000 units of its automobile scissors jack and 80,000 units of its truck hydraulic jack. Having identified its activity cost pools and the cost drivers for each cost pool, Casey Company accumulated the following data relative to those activity cost pools and cost drivers.

Using the above data, do the following.

1. Prepare a schedule showing the computations of the activity-based overhead rates per cost driver.
2. Prepare a schedule assigning each activitys overhead cost to the two products.
3. Compute the overhead cost per unit for each product.
4. Comment on the comparative overhead cost per unit.

Annual Overhead Data Activity Cost Pools Ordering and receiving Machine setup Machining Assembling Inspecting and testing Cost Drivers Purchase orders Setups Machine hours Parts Tests Estimated Overhead $ 200,000 600,000 2,000,000 1,800,000 700,000 $5,300,000 Expected Use of Cost Drivers per Activity 2,500 orders 1,200 setups 800,000 hours 3,000,000 parts 35,000 tests Expected Use of Cost Drivers per Product Scissors Hydraulic Jacks Jacks 1,000 1,500 500 700 300,000 500,000 1,800,000 1,200,000 20,000 15,000