Sparks Company Produces and Distributes Two Types of Garden Sculptures

Essay

Sparks Company produces and distributes two types of garden sculptures, Plain and Fancy. Budgeted cost and activity for each of its three activity cost pools are shown below. The company plans to produce and sell 64,000 plain units and 49,150 fancy units.

$$\begin{array} { | l | l | l | l | } \hline & &{ \text { Budgeted Activity } } \\\hline \text { Activity Cost Pool } & \text { Budgeted Cost } & \text { Plain } & \text { Fancy } \\\hline \text { Packaging } & \$ 360,000 & 70,000 \text { finished units } & 130,000 \text { finished units } \\\hline \text { Material handling } & \$ 262,500 & 140,000 \text { total parts } & 210,000 \text { total parts } \\\hline \text { Production setups } & \$ 125,000 & 5 \text { total setups } & 20 \text { total setups } \\\hline\end{array}$$
a. Compute the approximate overhead cost per unit of Plain under activity-based costing.
b. Compute the approximate overhead cost per unit of Fancy under activity-based costing.