Consider the following data for two products of Vigano Manufacturing.

 Consider the following data for two products of Vigano Manufacturing.
 

Activity    Budgeted Cost    Activity Driver
Machine setup    $ 10,000    20 machine setups
Parts handling    8,000    16,000 parts
Quality inspections    12,000    100 inspections
Total budgeted overhead    $ 30,000    
 

Unit Information    Product A    Product B
Units produced    1,000    units    200    units
Direct materials cost    $ 20    per unit    $ 30    per unit
Direct labor cost    $ 40    per unit    $ 50    per unit
Direct labor hours    2.0    per unit    2.5    per unit

1. Using a plantwide overhead rate based on 2,500 direct labor hours, compute the total product cost per unit for each product.

2. Consider the following additional information about these two products. If activity-based costing is used to allocate overhead cost, (a) compute overhead activity rates, (b) allocate overhead cost to Product A and Product B and compute overhead cost per unit for each, and (c) compute product cost per unit for each.
 

Actual Activity Usage    Product A    Product B
Setups    8    setups    12    setups
Parts    10,000    parts    6,000    parts
Inspections    40    inspections    60    inspections

 

Explanation
1.
Plantwide overhead rate = $30,000/2,500 DLH = $12 per DLH
 
Allocate overhead using plantwide rate

Thanks