Alpha Technology produces two products: a high end laptop under the label Excellent Laptops and an inexpensive desktop under the label Outstanding Computers.The two products use two overhead activities, with the following costs:
The controller has collected the expected annual prime costs for each product, the machine hours, the setup hours, and the expected production.

- Calculate the overhead cost per unit for each of Outstanding Computer's computer using overhead rates based on machine hours and setup hours.(Note: Round answer to two decimal places.)
A) $6.10 per unit
B) $3.99 per unit
C) $5.75 per unit
D) $4.88 per unit

Question

Alpha Technology produces two products: a high end laptop under the label Excellent Laptops and an inexpensive desktop under the label Outstanding Computers.The two products use two overhead activities, with the following costs:  
The controller has collected the expected annual prime costs for each product, the machine hours, the setup hours, and the expected production.

-  Calculate the overhead cost per unit for each of Outstanding Computer's computer using overhead rates based on machine hours and setup hours.(Note: Round answer to two decimal places.)
A) $6.10 per unit 
B) $3.99 per unit 
C) $5.75 per unit 
D) $4.88 per unit

Quizplus · Accepted Answer

Machine rate = Cost of machining / Total machine hours = $15,000 / (2,000 machine hours + 850 machine hours) = $15,000 / 2,850 machine hours = $5.26 per machine hour
Setup rate = Cost of setting up equipment / Total setup hours = $3,000 / 155 setup hours (80 setup hours + 75 setup hours) = $19.35 per setup hour
 
Assigning costs to each of Outstanding Computer's computer:
 
 11ea8a4c_48e0_a1c5_a0e6_cbb92ee62742_TB5550_00 Unit overhead cost for Outstanding Computer's computer = Total overhead cost / Expected production in units = $11,971.25 / 3,000 units = $3.99 per unit

Alpha Technology Produces Two Products: a High End Laptop Under