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Allocation rate per order, forecasted productions units for Norah Co

Zipp Company manufactures two products (X and Y). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:

Product Number of Setups Machine Hours Packing Orders
X 10 500 75
Y 10 2,000 175

Cost per pool $9,000 $60,000 $15,000

What is the allocation rate per packing order using activity-based costing?
1- $15,000
2- $60
3- $7,500
4- $200

The following forecasted sales pertain to Norah Company:

Month Sales
April $200,000
May 250,000
June 150,000
July 100,000

Collection pattern:
60 percent in month of sale
40 percent in month following the sale

Accounts receivable as of March 31 $35,000
Finished goods inventory as of March 31 4,000 units

The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of the next month's sales.

How many units are expected to be produced in April?
a- 21,000 units
b- 19,000 units
c- 25,000 units
d- 20,000 units

Solution Summary

Allocation rate per order and the forecasted production units for Nora are examined.