Reference no: EM132611520

Grand Flower Company, a manufacturer of valves, produces and sells two types of valves: Gas Safety Valves (GSV) and MSC Valves (MSC). Friends Company has the following data for the two products:

                                                      GSV                        MSC

Production volume                  10,000               5,000

Unit selling price                         $ 78                 $ 130

In addition, Friends Company has identified the following activities, costs, and activity consumption cost drivers:

Activity                        Budgeted Cost                      Cost Driver

Machine set-ups         $100,000                         Number of set-ups

Machine running               $400,000                     Machine-hours

Inspection                      $70,000                     Inspection-hours

Packing                            $30,000                    Number of packing-orders

Total overhead                    $600,000

Friends Company also collected the following activity data for each product:

           Cost Driver                     GSV                  MSC                        Total

Number of set-ups                    80                  260                    340

Machine-hours                       18,000                36,000               54,000

Inspection-hours                       3,000                 4,000                  7,000

Number of packing-orders               2,100                   3,500             5,600

Required

Question (i) Calculate Overhead Absorption Rate for products GSV and MSC

Question (ii) Calculate the Overhead cost per unit for Products GSV and MSC respectively using Activity Based costing technique