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    Cost per unit and pool rates for two version of treadmills

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    A company produces two versions of treadmills: a standard and a deluxe. The deluxe is wider and sturdier and offers monitoring of heart rate, etc. This is the data for the beginning of the year:

    ** (Information about treadmills in attachment) **

    Questions to answer:
    #1. What is the cost per unit for each product using direct labor hours to assign all overhead costs?
    #2. Form homogenous cost pools, and calculate pool rates. Explain why you would group activities in the pools that are formed.
    #3. Using the pool rates computed in Question #2; calculate the cost per unit for each product. Compare these costs with those calculated using the functional based method. Which cost is the most accurate?

    (Please see attachment for complete problem)

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    Solution Summary

    The costs per units and pool rates for two versions of treadmills are determined.