Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic. Activity Expected Costs Expected Activity Handling materials $ 625,000 100,000 parts Inspecting product 900,000 1,500 batches Processing purchase orders 105,000 700 orders Paying suppliers 175,000 500 invoices Insuring the factory 300,000 40,000 square feet Designing packaging 75,000 2 models Assume that the following information is available for the company’s two products for the first quarter of 2017. Deluxe Model Basic Model Production volume 10,000 units 30,000 units Parts required 20,000 parts 30,000 parts Batches made 250 batches 100 batches Purchase orders 50 orders 20 orders Invoices 50 invoices 10 invoices Space occupied 10,000 sq. ft. 7,000 sq. ft Models 1 model 1 model Required:Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate answers to 2 decimal places.)
Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic. Activity Expected Costs Expected Activity Handling materials $ 625,000 100,000 parts Inspecting product 900,000 1,500 batches Processing purchase orders 105,000 700 orders Paying suppliers 175,000 500 invoices Insuring the factory 300,000 40,000 square feet Designing packaging 75,000 2 models Assume that the following information is available for the company’s two products for the first quarter of 2017. Deluxe Model Basic Model Production volume 10,000 units 30,000 units Parts required 20,000 parts 30,000 parts Batches made 250 batches 100 batches Purchase orders 50 orders 20 orders Invoices 50 invoices 10 invoices Space occupied 10,000 sq. ft. 7,000 sq. ft Models 1 model 1 model Required:Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate answers to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic.
| Activity | Expected Costs | Expected Activity | ||||
| Handling materials | $ | 625,000 | 100,000 | parts | ||
| Inspecting product | 900,000 | 1,500 | batches | |||
| Processing purchase orders | 105,000 | 700 | orders | |||
| Paying suppliers | 175,000 | 500 | invoices | |||
| Insuring the factory | 300,000 | 40,000 | square feet | |||
| Designing packaging | 75,000 | 2 | models | |||
Assume that the following information is available for the company’s two products for the first quarter of 2017.
| Deluxe Model | Basic Model | |||
| Production volume | 10,000 | units | 30,000 | units |
| Parts required | 20,000 | parts | 30,000 | parts |
| Batches made | 250 | batches | 100 | batches |
| Purchase orders | 50 | orders | 20 | orders |
| Invoices | 50 | invoices | 10 | invoices |
| Space occupied | 10,000 | sq. ft. | 7,000 | sq. ft |
| Models | 1 | model | 1 | model |
Required:
Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate answers to 2 decimal places.)
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