Overhead cost drivers: determination and use of unit cost

during june, assembly department no. 4 of hot tech produced 15,000 model 201 computer keyboards. assembly of these
units required 1,875 hours of direct labor at a cost of $45,000. direct materials costing 5121.000, and 400 hours of machine
time. based on an analysis of overhead costs at the beginning of the year, overhead is applied to keyboards using the
following formula:

overhead = 120% of dlrect labor cost + $350 per machlne hour

3. compute the total amount of overhead cost applied to the 15.000 keyboards.

b. compute the per-unit cost of manufacturing these keyboards.

c. briefly explain whythe department might use two separate activity bases in applying overhead costs to one type of
product

d. identify at least two types of overhead cost pools that might be "driven" by each of the two cost drivers indicated in this
situation.

e. what appears to be the pfima/ydriver of overhead costs in the manufacture of keyboards?

f. compute the gross profit that will result from the sale of 4.000 of these keyboards at a sales price of $40 each.

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?

Warby parker, a manufacturer of fashionable prescription eyewear, notes on its website, "warby parker was founded with a rebellious spirit and a loft objective: to offer designer eyewear at a revolutionary price, while leading the way for socially-conscious business." this excerpt from the company's website states warby parker's

George retired from a local law firm and then volunteered to oversee a nonprofit's legal records. george is performing the duties of a: