Cooke Company manufactures two products, Product F and Product G. The company ex
ID: 2571663 • Letter: C
Question
Cooke Company manufactures two products, Product F and Product G. The company expects to produce and sell 1,400 units of Product F and 1,800 units of Product G during the current year. The company uses activity-based costing to compute unit product costs for external reports. Below are current year data for the company's three activity cost pools.
Activity
Cost Pool
Total
Cost
1,520 ordeers
Required: Using the activity-based costing approach, determine the overhead cost per unit for each product.
Activity
Cost Pool
Total
Cost
Product F Product G TotaL Machine setups $10,800 80 setups 100 setups 180 setups Purchase orders $77,520 510 orders 1,010 orders1,520 ordeers
General factory $75,920 2,240 hours 3,600 hours 5,840 hoursExplanation / Answer
CALCULATION OF THE COST DRIVER PER ACTIVITY Activity Cost Pool Total Cost Total Activity Cost Per activity = Total Cost / Total Activity Machiene Set-Ups 10,800 180 Set-Ups 60 Purchase Orders 77,520 1,520 Orders 51 General Factory 75,920 5,840 Hours 13 Total Cost 1,64,240 Calculation of Total Cost of Product F on the Basis of ABC Activity Cost Pool Àctivity Cost per activity Total Cost Machiene Set-Ups 80 Set-Ups 60 4,800 Purchase Orders 510 Orders 51 26,010 General Factory 2,240 Hours 13 29,120 Total Cost 59,930 Total units = 1,400 Cost per unit = Total Cost / Total Units 42.81 Answer = Cost Per unit of Product F = $ 42.81 Calculation of Total Cost of Product G on the Basis of ABC Activity Cost Pool Àctivity Cost per activity Total Cost Machiene Set-Ups 100 Set-Ups 60 6,000 Purchase Orders 1,010 Orders 51 51,510 General Factory 3,600 Hours 13 46,800 Total Cost 1,04,310 Total units = 1,800 Cost per unit = Total Cost / Total Units 57.95 Answer = Cost Per unit of Product G = $ 57.95