Reference no: EM133050580

Question - Speed Demon Inc. manufactures two products: speedometers and odometers. During the month, it produced 2,000 speedometers and 3,000 odometers and incurred estimated overhead costs of $45,300. This month, the company incurred the following:

	Speedometers	Odometers
Machine Hours	750	1,000
Labour Hours	1,200	800
Labor Cost	$12,000	$18,000

Management is considering implementing activity-based costing. An analysis of estimated overhead costs reveals the following activities:

Activity	Overhead Cost	Allocation Base	Expected Activity
			Speedometers	Odometers
Materials Handling	$18,000	# of requisitions	400	600
Machine Set-Ups	$12,600	# of set-ups	150	300
Inspections	$14,700	# of inspections	200	400

The company currently allocates overhead based on direct labor hours.

Required -

1) Compute the predetermined overhead rate using machine hours as the basis for allocating overhead costs to products.

2) What is the total overhead allocated to odometers using the current costing system?

3) What is the per unit cost of odometers using the current costing system? Round answer to two decimal places.