Sonoma Manufacturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum).  Information is presented below:

 

Cost Drivers by Product

Activity Cost Pool                            Cost Driver             Est. Overhead             Budget                 Deluxe 

Ordering and Receiving                 Orders                             $   120,000                         600                         400

Machine Setup                                 Setups                                   297,000                         500                         400

Machining                                           Machine hours               1,000,000                 150,000                 100,000

Assembly                                            Number of Parts           1,600,000             1,400,000                 800,000

Inspection                                           Inspections                         300,000                         550                         450

 

Instructions

  1. Compute the estimated overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. Round your answer to the nearest cent.
  2. Assume Sonoma used a more traditional OH allocation method and used only machine hours to allocate MOH. How much overhead would be assigned to each product and what are the estimated unit OH for each product?
  3. The company estimates that DM costs for the Budget model are $2.10 per unit and the DL costs are $3.40. The DM costs for the Deluxe model are $9.40 and the DL costs are $4.10.
  4. The company has received three orders, Customer A wants 1000 units of the budget tape vacuum, Customer B wants 3000 units of the budget item and 4000 units of the deluxe item and Customer C wants 10,000 units of the Deluxe model. The requirements for each job are listed below:

 

     Customer Customer A

Budget

  

Deluxe

 Customer B

Budget

  

Deluxe

 Customer C

Budget

  

Deluxe
Cost Driver
Orders 1 2 8 18
Setups 1 3 7 16
MHours 200 600 2,000 5,000
Parts 2000 6,000 16,000 40,000
Inspections 1 2 7 20

 

Calculate the total costs for each customer’s job and the unit costs for each product in their order.

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