Crane is an electronics components manufacturer. Information about the company's two products follows: AM-2 &FM-9 Units produced: AM-2 = 18,000 /...
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Crane is an electronics components manufacturer. Information about the company's two products follows:

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AM-2 & FM-9

Units produced: AM-2 = 18,000 / FM-9 = 600

Direct labor hours required for production: AM-2 = 24,000 / FM-9 = 19,000

Units per batch: AM-2 = 4,000 / FM-9 = 90

Shipping weight per unit: AM-2 = 0.50lbs. / FM-9 = 4lbs.

The company incurs $1,412,655 in overhead per year and has traditionally applied overhead on the basis of direct labor hours.


(i)How much overhead will be allocated to each product using the traditional direct labor hours allocation base? (Round per unit rates to 2 decimal places, e.g. 3.54 and final answers to 0 decimal places, e.g. 45,000.)    


Overhead allocated to each product

AM-2 = $788,400

FM-9 = $624,150


(ii)What overhead cost per unit will be allocated to each product? (Round answers to 2 decimal places, e.g. 15.25.)    


Overhead cost per unit$

AM-2 = $43.80

FM-9 = $173.38


Assume that Crane has identified three activity cost pools.


Pool             Cost              Cost Driver

Assembly     $1,075,000     Direct labor hours

Setup           $122,375        Number of setups (1 per batch)

Packaging    $215,280        Weight



(i)Given these activity pools and cost drivers, how much overhead should be allocated to each product? (Round per unit rates to 2 decimal places, e.g. 3.54 and final answers to 0 decimal places, e.g. 45,000.)AM-2FM-9


Total allocated overhead

AM-2 =

FM-9 =


(ii)What overhead cost per unit will be allocated to each product? (Round answers to 2 decimal places, e.g. 15.25.)AM-2FM-9


Overhead cost per unit

AM-2 =

FM-9 =

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Traditional Method (i). Overhead allocated to each product: AM-2 =$788,400 FM-9=$624,150 (ii). The... View the full answer

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