SCS Co. uses activity-based costing in their manufacturing process. The company produces two products, ABC and XYZ. SCS has provided their costing department the following information from this year's budget relating to the production of these two products:
The following costs are expected to be incurred throughout the year, and are related to the cost drivers being measured:
What is the expected overhead allocated per unit of product ABC? NOTE: Round all per-unit costs to nearest cent.
A) $10.30
B) $30.77
C) $84.00
D) $200.00
E) None of the above

Question

SCS Co. uses activity-based costing in their manufacturing process. The company produces two products, ABC and XYZ. SCS has provided their costing department the following information from this year's budget relating to the production of these two products:
 The following costs are expected to be incurred throughout the year, and are related to the cost drivers being measured:
 What is the expected overhead allocated per unit of product ABC? NOTE: Round all per-unit costs to nearest cent.
A) $10.30 
B) $30.77 
C) $84.00 
D) $200.00 
E) None of the above

Quizplus · Accepted Answer

Rates:
Materials handling: $4,000 / (60 + 70) moves = $30.77 / move (rounded)
Labor-related: $42,000 / (200 + 300) hours = $84.00 / direct labor hour
Set-ups: $7,000 / (20 + 15) = $200 / setup
Total Costs:
ABC:
$30.77 / move × 60 moves = $1,846.20
$84 / DLH × 200 hours = $16,800
$200 / set up × 20 setups = $4,000
Total = $22,646.20
Per unit: $22,646.20 / 4,000 units = $5.66/unit (rounded)

SCS Co Uses Activity-Based Costing in Their Manufacturing Process