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Which product will be undercosted and which will be overcosted with the one cost pool system? Exercise 2) Computech Company manufactures mouse devices for computers. They make 12 different models as well as several other types of computer components. They have recently adopted an activity-based costing system to assign manufacturing overhead to products. The following data relate to one of their products, the wireless Remote Mouse, and the ABC cost pools: Remote Mouse: Annual production Direct materials per unit Direct labor per unit 20,000 units $31 $6 Manufacturing overhead cost pools: Cost Cost Driver Cost Pool Materials ordering Materials inspection Equipment setup Quality control Other s 800,000 400,000 2,000,000 900,000 15,000,000 Number of purchase orders Number or receiving reports Number of setups Number of inspections Direct labor cost Activity information related to cost drivers: Annual Activity Cost Pool Materials ordering Materials inspection Equipment setup Quality control Other All Products 100,000 orders 2,000 receiving reports Remote Mouse 1,000 300 100 setups 4,000 inspections $10,000,000 direct labor 400 $120,000 Required 1) Calculate the overhead rate per unit of activity for each of the five cost pools. 2) Calculate the total overhead assigned to the production of the Remote Mouse. 3) Calculate the overhead cost per unit for the Remote Mouse. 4) Calculate the total unit cost for the Remote Mouse. 5) Suppose that Computech allocates overhead by a traditional production volume-based method using direct labor dollars as the allocation base and one cost pool. Determine the total unit cost for the Remote Mouse using the traditional method. 6) Is the job under-costed or over-costed using the traditional costing system and by how much

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