Step 3 rate per driver unit for machine related costs

Step 3. Rate per driver unit for Machine related costs (pool 2)
___ 352,600 ____ divided by ___ 16,400 ____ = _____ 21.50 ______
Step 4: Rate per driver unit for Production order related costs (pool 3)
_____ 174,120 ____ divided by ______ 41 _____ = ____ 4246.83 ___
Step 5: Rate per product line for parts administration (pool 4)
______ 167,500 ___________ divided by ____ 28 __________ = _____
5982.14 __________
Step 6: Rate per driver unit for Inventory, receiving, shipping costs (pool 5)
_______ 197, 450 _________ divided by ____ 1240 __________ =
_____ 159.23 __________
Step 7: Rate per product line for facility level costs (pool 6) : = 106380/3=
35460

ACCOUNTING 2332 FIRST COURSE PROJECT SPRING 2008
Total overhead for eyepieces :
Pool 1 ____ 4.067 ________ X ____ 28800 _______ =
Pool 2 _____ 21.5 ________ X ____ 2400 ________ =
Pool 3 _____ 4246.83 ________ X ____ 12 ________ =
Pool 4 ___ 5982.14 __________ X _____ 2 ________ =
Pool 5 _____ 159.23 ________ X ______ 30 _______ =
Pool 6 34560 =
_________
TOTAL OVERHEAD ALLOCATED TO EYEPIECES =
Total overhead for binoculars :
Pool 1 ___ 4.067 _________ X ___ 31500 _________ =
Pool 2 ____ 21.50 _________ X _____ 6000 _______ =
Pool 3 ____ 4246.83 _________ X ____ 15 ________ =
Pool 4 ____ 5982.14 _________ X ______ 6 _______ =
Pool 5 ____ 159.23 _________ X _____ 210 ________ =
Pool 6 34560 =
_________
TOTAL OVERHEAD ALLOCATED TO BINOCULARS =
Total overhead for camera lens :
Pool 1 _____ 4.067 _______ X ____ 14000 ________ =
Pool 2 ____ 21.50 _________ X ___ 8000 _________ =
Pool 3 ____ 4246.83 _________ X _____ 14 _______ =
Pool 4 _____ 5982.14 ________ X _____ 20 ________ =
Pool 5 _____ 159.23 ________ X ______ 1000 _______ =
Pool 6 34560 =
_________
TOTAL OVERHEAD ALLOCATED TO CAMERA LENS
D. Now compute the cost per unit of overhead
7

ACCOUNTING 2332 FIRST COURSE PROJECT SPRING 2008
Product Total
Overhead
Allocated
Production in
Units
Overhead
Cost per Unit
EYEPIECES:
271,892.74 24000 11.33
BINOCULARS: 425,604.09 21000 20.27
CAMERAL LENS: 602,726.42 7000 86.10
E. Now compute the total unit cost and the profit margin per unit using activity
based costing.
Product License
& patent
fees per
unit
Direct
materials
and labor
per unit
Overhead
Cost per unit
Total Unit
Cost
EYEPIECES:
8.0 40 11.33 59.33
BINOCULARS: 20 32 20.27 72.27
CAMERAL LENS: 25 80 86.10 191.1
Product Selling Price Total Unit
Cost
Profit Margin
Per Unit
EYEPIECES:
64 59.33 4.67
BINOCULARS: 80 72.27 7.73
CAMERAL LENS: 150 191.10 (41.10)
NOTE: ANSWERING PARTS F AND G OF ZEUS OPTICALS BELOW
8

ACCOUNTING 2332 FIRST COURSE PROJECT SPRING 2008
There is no "single" correct answer. Your answers should show some thought and professional
presentation. If you are unwilling to be professional in your answer, then we are unwilling to give you full
credit. Short phrase, single word scrawled answers will not receive full credit.
F. Based on the ABC profit margins, what actions would you recommend for
Zeus’ management.
G. Suppose Zeus were to achieve a level of sales for camera lenses equal to
14,000 units (two times the current level). How would this affect your
analysis of the profitability of this product line and what additional
information if any would you need in order to improve your analysis?
9