Question: PB43 Selecting Cost Drivers, Assigning Costs Using Activity Rates LO 41, LO 43, LO 44, LO 46 Berry Good Company makes two types of energy

PB43 Selecting Cost Drivers, Assigning Costs Using Activity Rates LO 41, LO 43, LO 44, LO 46

Berry Good Company makes two types of energy drinks, cherry and strawberry. Basic production information follows:

Cherry Strawberry
Direct materials cost per unit $0.70 $0.80
Direct labor cost per unit 0.25 0.25
Sales price per unit 2.50 2.50
Expected production per month 140,000 units 190,000 units

Berry Good has monthly overhead of $159,670, which is divided into the following cost pools:

Setup costs $ 75,000
Quality control 25,000
Maintenance 40,500
Engineering 19,170
Total $159,670

The company has also compiled the following information about the chosen cost drivers:

Cherry Strawberry Total
Number of setups required 40 60 100
Number of inspections 275 350 625
Number of machine hours 1,500 750 2,250
Number of engineering hours 65 70 135

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