Question

tent master produces pup tents and pop - up tents. the company budgets $252,000 of overhead cost and 42,000 direct labor hours. additional information follows.
activity budgeted cost activity cost driver budgeted activity usage
assembly $168,000 direct labor hours (dlh) 42,000
electricity 24,000 machine hours (mh) 10,000
materials purchasing 60,000 purchase orders (po) 400
total $252,000
the following actual activity usage produced 10,000 pup tents and 6,000 pop - up tents.
activity cost driver activity usage
pup tents pop - up tents
direct labor hours (dlh) 30,000 12,000
machine hours (mh) 4,000 6,000
purchase orders (po) 150 250
compute overhead cost per unit for pop - up tents.
a. $16.65
b. $15.21
c. $152,100
d. $99,900

Explanation:

Step1: Calculate assembly cost per DLH

The budgeted assembly cost is $168,000 and budgeted DLH is 42,000. So the assembly cost per DLH is $\frac{168000}{42000}=4$ dollars per DLH.

Step2: Calculate electricity cost per MH

The budgeted electricity cost is $24,000 and budgeted MH is 10,000. So the electricity cost per MH is $\frac{24000}{10000}=2.4$ dollars per MH.

Step3: Calculate materials - purchasing cost per PO

The budgeted materials - purchasing cost is $60,000 and budgeted PO is 400. So the materials - purchasing cost per PO is $\frac{60000}{400}=150$ dollars per PO.

Step4: Calculate overhead cost for Pop - up tents

For assembly: The Pop - up tents use 12,000 DLH, so the cost is $12000\times4 = 48000$ dollars.
For electricity: The Pop - up tents use 6,000 MH, so the cost is $6000\times2.4=14400$ dollars.
For materials purchasing: The Pop - up tents use 250 PO, so the cost is $250\times150 = 37500$ dollars.
The total overhead cost for Pop - up tents is $48000 + 14400+37500=99900$ dollars.

Step5: Calculate overhead cost per unit for Pop - up tents

There are 6,000 Pop - up tents. So the overhead cost per unit is $\frac{99900}{6000}=16.65$ dollars per unit.

Answer:

A. $16.65