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Silven Company has identified the following overhead activities, costs, and activity drivers for the coming...

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Accounting

Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year:

Activity Expected CostActivity Driver Activity Capacity

Setting up equipment $126,000 Number of setups 150

Ordering materials 18,000 Number of orders 900

Machining 126,000 Machine hours 10,500

Receiving 30,000 Receiving hours 1,250

Silven produces two models of cell phones with the following expected activity demands:

Model X Model Y

Units completed 5,000 10,000

Number of setups 100 50

Number of orders 300 600

Machine hours 6,000 4,500

Receiving hours 375 875

Required:

1.Determine the total overhead assigned to each product using the four activity drivers.

2.Determine the total overhead assigned to each model using the two most expensive activities. The costs of the two relatively inexpensive activities are allocated to the two expensive activities in proportion to their costs. Show formula. For example, Total cost + proration of least expensive activities = New Cost Pool

3.Using ABC as the benchmark, calculate the percentage error. Round your answers to two decimal places. Explain why this approach may be desirable.

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