1.

The cost of each product using a plant- wide rate based on machine hours :

Total budgeted machine hours = 160, 000

Total budgeted overhead dollar = $ 960, 000

Overhead rate = total budgeted overhead dollars / total budgeted machine hours

$ 960, 000 / 160, 000 MH = $ 6. 00 per MH

43 X $ 6 per MH = $ 258

30 X $ 6 per MH = $ 180

25 X $ 6 per MH = $ 150

ITEM ALPHAS BETAS ZEBAS

Direct material $ 680 $ 300 $ 730
Direct labor $ 900 $ 560 $ 850
Manufacturing
$ 258 $ 180 $ 150
overhead
Total unit coast $ 1, 838 $ 1, 040 $ 1, 730

2. Activity rate for setup, engineering changes, inspection & packing :

BUDGETED
ESTIMATED ACTIVITY COST
ACTIVITY OVERHEAD
ACTIVITY RATE
DOLLAR
Machine setups $ 170, 000 34 setup $ 5000 per setup
Engineering
$ 320, 000 400 changes $ 800 per change
changes
Inspection &
$ 470, 000 5, 000 unit $ 94 per unit
packing
3. Cost out the three product using an activity-based costing :

COST ITEM ALPHAS BETAS ZEBAS

Direct material 680, 000 1, 020 000 438, 000
Direct labor 900, 000 1, 904 000 510, 000

Manufacturing overhead :

Machine setup:
5 x $ 5000 per setup 25 , 000
9 x $ 5000 per setup 45, 000
20 x $ 5000 per setup 100, 000
Engineering changes:

140 x $ 800 per changes 112, 000

8 x $ 800 per changes 6, 400

252 x $ 800 per changes 201, 600

Inspection & packing

1000 x $ 94 per unit 94, 000
3, 400 x $ 94 per unit 319, 600
600 x $ 94 per unit 56, 400
Total manufacturing cost
$ 1, 811 000 $ 3, 295 000 $ 1, 306 000
unit

Total unit produced 1, 000 3, 400 600

Total cost per unit $ 1, 811 $ 969. 12 $ 2, 176.66