The Good 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 defining three activity cost pools and three corresponding 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:
Activity Cost Driver Estimated OH costs Estimated Activity level
- Supervision Direct Labor $ $60,000 $150,000
- Inspection # Inspections $40,000 2,000
- Machine use Machine hours $400,000 10,000
Radios CD Players
Direct Labor $ $120,000 $30,000
# Inspections 500 1,500
Machine hours 5,000 5,000
Radios CD Players
Direct Material $1,500,000 $500,000
Direct Labor $120,000 $30,000
Units produced 20,000 10,000
What is the unit cost of a CD player?