Ellis Perry is an electronics components manufacturer. Information about the company's two products follows: FM-9 Units...

 

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Ellis Perry is an electronics components manufacturer. Information about the company's two products follows: FM-9 Units produced Direct labor hours required for production Units per batch Shipping weight per unit AM-2 15,000 15,000 3,000 0.5 lbs. 2,000 14,000 50 4 lbs. The company incurs $899,000 in overhead per year and has traditionally applied overhead on the basis of direct labor hours. Required a. How much overhead will be allocated to cach product using the traditional direct labor hours allocation base? What overhead cost per unit will be allocated to each product? b. Assume that Ellis Perry has identified three activity cost pools. Pool Cost Cost Driver Assembly Setup Packaging $638,000 121,500 139,500 Direct labor hours Number of setups (1 per batch) Weight Given these activity pools and cost drivers, how much overhead should be allocated to each product? What overhead cost per unit will be allocated to each product? c. Explain the change in overhead costs per unit. Ellis Perry is an electronics components manufacturer. Information about the company's two products follows: FM-9 Units produced Direct labor hours required for production Units per batch Shipping weight per unit AM-2 15,000 15,000 3,000 0.5 lbs. 2,000 14,000 50 4 lbs. The company incurs $899,000 in overhead per year and has traditionally applied overhead on the basis of direct labor hours. Required a. How much overhead will be allocated to cach product using the traditional direct labor hours allocation base? What overhead cost per unit will be allocated to each product? b. Assume that Ellis Perry has identified three activity cost pools. Pool Cost Cost Driver Assembly Setup Packaging $638,000 121,500 139,500 Direct labor hours Number of setups (1 per batch) Weight Given these activity pools and cost drivers, how much overhead should be allocated to each product? What overhead cost per unit will be allocated to each product? c. Explain the change in overhead costs per unit.