A company has two products: standard and deluxe. The company expects to produce 36,375
standard units and 62,240 deluxe units. It uses activity-based costing and has prepared the
following analysis showing budgeted cost and cost driver activity for each of its three activity
cost pools. Budgeted Activity of Cost Driver Activity Cost Pool Activity 1 Activity 2 Activity 3
Budgeted Cost Standard Deluxe 5,250 5,500 $93,000 $92,000 $87,000 2,500 4,500 3,000
Required: What is the overhead cost per unit for the standard units? What is the overhead cost
per unit for the deluxe units? (Round activity rate and cost per unit answers to 2 decimal places.)
Activity Expected CostsActivity Driver ExpectedActivity Rate Activity Driver Activity Rate
93,000 92,000 87,000 Standard Activity Activity Driver Activity Rate Allocated Cost 2
Solution
Activity Expected Cost Standard Driver Deluxe Driver Total Driver Rate 1 $93,000.00 2500
5250 7750 $12.00 2 $92,000.00 4500 2500 7000 $13.14 3 $87,000.00 3000 2800 5800 $15.00
Standard Activity Activity Driver Act. Rate Allocated Cost 1 2500 $12.00 $30,000.00 2 4500
$13.14 $59,142.86 3 3000 $15.00 $45,000.00 Total $134,142.86 Deluxe Activity Activity Driver
Act. Rate Allocated Cost 1 5250 $12.00 $63,000.00 2 2500 $13.14 $32,857.14 3 2800 $15.00
$42,000.00 Total $137,857.14