The overhead applied to each unit of Product J8 under activity-based costing is closest to:
A)$629.91 per unit
B)$723.78 per unit
C)$740.39 per unit
D)$405.73 per unit

Question

Quizplus · Accepted Answer

To calculate the overhead rate, we need to first calculate the total overhead cost for each activity:
Activity 1: $600,000 + $250,000 = $850,000
Activity 2: $300,000 + $180,000 = $480,000
Activity 3: $400,000 + $150,000 = $550,000
Activity 4: $120,000 + $90,000 + $60,000 = $270,000

Next, we need to calculate the cost driver rates:
Activity 1: $850,000 / 15,000 machine hours = $56.67 per machine hour
Activity 2: $480,000 / 1,600 setups = $300 per setup
Activity 3: $550,000 / 10,000 direct labor hours = $55 per direct labor hour
Activity 4: $270,000 / 9,000 material moves = $30 per material move

Finally, we can calculate the overhead applied to Product J8:
Activity 1: 2,000 machine hours x $56.67 per machine hour = $113,340
Activity 2: 3 setups x $300 per setup = $900
Activity 3: 4,500 direct labor hours x $55 per direct labor hour = $247,500
Activity 4: 2,250 material moves x $30 per material move = $67,500
Total overhead cost applied to Product J8 = $429,240
Overhead per unit of Product J8 = $429,240 / 594 units = $723.78 per unit

Therefore, the answer is B. Computation of activity rates: 11ea7998_5eaf_c9e5_911b_27878eafdd01_TB2627_00_TB2627_00 Computation of the overhead cost per unit under activity-based costing. 11ea7998_5eaf_c9e6_911b_0d881fe99a11_TB2627_00_TB2627_00

The Overhead Applied to Each Unit of Product J8 Under