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A company manufactures three products, Alpha, Beta, and Gama. Total overhead costs amount to $ 560,000. The company allocates these costs to products based on a predetermined overhead rate, calculated by dividing $ 560,000 by the total number of budgeted direct labor hours. This number for the current year is 70,000 hours.

Alfa used 12,000 hours and 16,000 units were produced

Beta used 24,000 hours and 19,200 units were produced

Gama used 34,000 hours and 20,000 units were produced

19. How much overhead cost was distributed per unit of product?

to. Alpha $ 10.14 Beta $ 10.14 Gamma $ 10.14

b. Alpha $ 6.00 Beta $ 10.00 Gamma $ 13.60

c. Alpha $ 10.67 Beta $ 6.40 Gamma $ 4.71

d. Alpha $ 8.00 Beta $ 8.00 Gamma $ 8.00

20. Now suppose that the company adopted ABC and identified three activity groups (pools). The activities, their corresponding cost drivers and their total cost are:

Machine setup Number of setups $ 160,000

Inspection Number of batches inspected $ 120,000

Product termination Number of machine hours used $ 280,000

The amount of each cost driver used by each product was:

Alpha: 8 setups, 150 batches and 3,000 machine hours

Beta: 9 setups, 100 batches and 5,000 machine hours

Range: 3 setups, 50 batches and 2,000 machine hours

The amount of overhead cost that was distributed to each unit of the product was:

to. Alpha $ 10.14 Beta $ 10.14 Gamma $ 10.14

b. Alpha $ 6.00 Beta $ 10.00 Gamma $ 13.60

c. Alpha $ 13.00 Beta $ 13.13 Gamma $ 5.00

d. Alpha $ 5.00 Beta $ 13.00 Gamma $ 13.13

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