Calculate the activity cost rates for (a) setups, (b) engineering changes, and (c) inspection and packing.
Activity Based Costing Problem
A costing system to charge overhead to products.
238,000 direct labor hours and 160,000 machine hours.
Budgeted (Estimated) Overhead Data For 2016:
Machine Setups $170,000 34 setups
Engineering Inspection & Charges Packing $320,000 $470,000 400 En.Ch. 5,000 units
Total Overhead $960,000
Item Overhead $ Activity Levels
Based on an analysis of the three overhead activities, it was estimated that the three products would require these activities as follows in fiscal year 2017: Betas Zetas Totals Activity Alphas 9 setups 20 setups 34 setups Machine Setups 5 setups 140 changes 8 changes 252 changes 400 changes Engineering Charges 1,000 units 3,400 units 600 units 5,000 units Inspection & Packaging
The direct material costs, direct labor costs, and target sales price for the three products are as follows: Alphas Betas Zetas Item $680 $300 $730 Direct Materials/unit $900 $560 $850 Direct Labor/unit $2,200 $1,600 $2,400 Target Sales Price/unit