Question:
Computing indirect manufacturing costs per unit
Day, Corp., is considering the use of activity-based costing. The following information is provided for the production of two product lines:
|
Activity
|
Cost
|
Cost Driver
|
|
Setup
|
$ 106,000
|
Number of setups
|
|
Machine maintenance
|
55,000
|
Machine hours
|
|
Total indirect manufacturing costs
|
$ 161,000
|
|
|
Product A
|
Product B
|
Total
|
|
Direct labor hours
|
6,500
|
5,500
|
12,000
|
|
Number of setups
|
20
|
180
|
200
|
|
Number of machine hours
|
1,600
|
2,400
|
4,000
|
Day plans to produce 400 units of Product A and 375 units of Product B.
Requirement
1. Compute the ABC indirect manufacturing cost per unit for each product.