Sparks Company produces and distributes two types of garden sculptures, Plain and Fancy. Budgeted cost and activity for each of its three activity cost pools are shown below. The company plans to produce and sell 64,000 plain units and 49,150 fancy units.
(a.) Compute the approximate overhead cost per unit of Plain under activity-based costing.
(b.) Compute the approximate overhead cost per unit of Fancy under activity-based costing.
Definitions:
Plantwide Predetermined Rate
A single overhead absorption rate calculated for an entire manufacturing plant, used to allocate manufacturing overhead to individual products.
Machine-Hours
A measure of production time, indicated by the number of hours machines are operating in the manufacturing process.
Manufacturing Cost
The total cost incurred by a company to produce goods, including raw materials, labor, and overhead.
Calculated Selling Price
The calculated selling price is the price at which a product must be sold to cover its costs and achieve a desired profit margin.
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