The goods sounds corp. is attempting to get a better estimate of the cost of their products.
As a first step, they are attempting to allocate overhead by definning three activity cost pools
and three corresponding cost drivers. They believe that cost drivers of each of these pools
correlate with the costs of that activity pool. The estimated overhead costs and activity levels
for each activity are given as follows;
Unit cost of CD player:
Activity cost driver estimated OH costs estimated activity levels
supervision direct labor$ 60,000 150,000
inspection #inspections 40,000 2,000
machine use machine hours 400,000 10,000
total=500,000
activity data for the two products mfg by the company at the year end are as follows:
radios CD players
Direct labor$ 1,500,000 500,000
#inspections 120,000 30,000
Machine hours 20,000 10,000
what is unit cost of a cd player?
