Column1

1)
2)
3)
4)
5)

Activities
Cost
Machine related expenses
Setup labor
Receiving and production control
Engineering
Packaging and shipment

336000
40000
180000
100000
150000

Overhead Cost
Column1 Activities
Valves
1)
Machine related
.5*30
expenses
2)
Setup labor (250/7500)*10
3)
Receiving and(1125/7500)*10
production control
4)
Engineering (80/7500)*250
5)
Packaging and(500/7500)*10
shipment
Total overhead per unit cost

Drivers
Machine hours
Production runs
Production runs
Hours of enginering work
Number of shipments

per unit cost

15.00
0.33
1.50
2.67
0.67
20.17

Direct cost
Direct material
Direct labor
Total direct cost per unit
Total cost per unit

16
10
26
46.17

Valves
Actual price

Pumps
86

87

Traditional costing
unit cost
gross margin

56
34.88%

70
19.54%

Activity based costing

unit cost
gross margin

46.17
46.32%

58.20
33.10%

Budgeted

Cost driver rate

11200
160
160
1250
300

Pumps
.5*30
(250/12500)*50
(1125/12500)*50
(80/12500)*375
(500/12500)*70

30
250
1125
80
500

per unit cost2

15.00
1.00
4.50
2.40
2.80
25.70

Flow controllers
.3*30
(250/4000)*100
(1125/4000)*100
(80/4000)*625
(500/4000)*220

per unit cost3

9.00
6.25
28.13
12.50
27.50
83.38

20
12.5
32.5

22
10
32

58.20

115.38

Flow controllers
105

62
40.95%

115.38
-9.88%