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A company makes three products, E, F and G. Total overheads for the year are expected to be $1.2 million, with the following split between cost pools:
Cost driver information has been estimated as follows:
The company plans to make 10,000 units of product E in the year, with an expected direct cost of $0.60 per unit. This annual production of product E is expected to require 20 quality inspections, 28 purchase requisitions, and 400 kilogrammes of materials.
What is the overhead cost per unit of product E?
Suggested Answer: A
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12 comments · newest first
MI
Mignon
12 months ago
Totally agree, $0.70 makes the most sense!
NI
Nicolette
12 months ago
Wait, $4.17 seems way too high for overhead!
LE
Letha
1 year ago
I think the overhead cost per unit is $0.70.
OR
Oren
1 year ago
They plan to make 10,000 units of E.
RE
Rene
1 year ago
Overheads are $1.2 million for the year.
TI
Titus
1 year ago
I think the overhead cost per unit is calculated by dividing total overhead by the number of units, but I can't recall the exact steps for this specific scenario.
LA
Lauran
1 year ago
I feel a bit confused about how to apply the cost driver rates to the units produced. Did we use a formula for that?
MA
Margarett
1 year ago
This question seems similar to one we did in class about overhead allocation. I think we need to find the total overhead for product E first.
YU
Yuette
1 year ago
I remember we practiced calculating overhead costs, but I'm not sure how to allocate them based on the cost drivers here.
GE
Gerald
1 year ago
This seems straightforward. I'll focus on the interface types and speeds to identify the two that are incompatible for the Multi-Chassis Link Aggregation setup.
AL
Albina
1 year ago
I feel a bit uncertain about the route-targets. Did we cover if PE2 needs to export those specific targets?
DO
Dortha
1 year ago
Okay, let me see if I can break this down. The senior responsible owner is the key decision-maker, so their focus would be on ensuring the vision is achievable and the organization can deliver the required changes. I'm leaning towards B as the best answer.