Megan Industries manufactures several products including a basic case for a popular smart phone. The company is considering adopting an activity-based costing approach for setting its budget. The company’s production activities, budgeted activity costs, and cost drivers for the coming year are as follows.

Activity Activity overhead $ Cost driver Cost driver quantity
Machine setup $217,600 # of setups 850
Inspection 149,930 # of quality tests 470
Materials receiving 177,620 # of purchase orders 1,660

The budgeted data for smart phone case production are as follows.

Direct materials $2.80 per unit
Direct labor $0.64 per unit
Number of setups 85
Number of quality tests 394
Number of purchase orders 61
Production 18,720 units


Calculate the activity rate for each cost pool.

Machine setup $ 256 per setup
Inspection $ 319 per test
Materials receiving $ 107 per PO

(b) Calculate the activity-based unit cost of the smart phone case. (Round answer to 2 decimal places, e.g. 1.64.)

Activity-based unit cost