The Pikes Peak Leather Company manufactures leather handbags (H) and moccasins (M). The company has been using the
factory overhead rate method but has decided to evaluate the activity based costing to allocate factory overhead. The factory overhead estimated per unit together with direct materials and direct labor will help determine selling prices.
Total Budgetted factory overhead cost = $360,000
ProductsCutting Direct Labor HoursSewing Direct Labor HoursSet-UpsQC InspectionsPurchase OrdersHandbags60,00060,000500200100Moccasins40,00080,000300800300Total100,000140,0008001,000400Budget$40,000$210,000$80,000$20,000$10,000
Calculate the amount of factory overhead to be allocated to each unit using activity based costing. The factory plans to produce 60,000 handbags, and 40,000 moccasins. Round your answers to two decimal places, if necessary.
Handbags: $______Per unit
Moccasin: $______per unit