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Question
Sparks Company produces and distributes two types of garden sculptures, Plain and Fancy. Budgeted cost and activity for each of its three activity cost pools are shown below. The company plans to produce and sell 64,000 plain units and 49,150 fancy units.
| Budgeted Activity | |||
| Activity Cost Pool | Budgeted Cost | Plain | Fancy |
| Packaging | $360,000 | 70,000 finished units | 130,000 finished units |
| Material handling | $262,500 | 140,000 total parts | 210,000 total parts |
| Production setups | $125,000 | 5 total setups | 20 total setups |
a. Compute the approximate overhead cost per unit of Plain under activity-based costing.
b. Compute the approximate overhead cost per unit of Fancy under activity-based costing.
Answer
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