Question:
Using ABC to compute product costs per unit
Jaunkas, Corp., manufactures mid-fi and hi-fi stereo receivers. The following data have been summarized:
|
Mid-Fi
|
Hi-Fi
|
|
Direct materials cost per unit
|
$ 400
|
$ 1,300
|
|
Direct labor cost per unit
|
400
|
300
|
|
Indirect manufacturing cost per unit
|
?
|
?
|
Indirect manufacturing cost information includes the following:
|
Activity
|
Allocation Rate
|
Mid-Fi
|
Hi-Fi
|
|
Setup
|
$1,700/per setup
|
39 setups
|
39 setups
|
|
Inspections
|
$ 400/per hour
|
45 hours
|
15 hours
|
|
Machine maintenance
|
$ 10/per machine hour
|
1,900 machine hours
|
1,200 machine hours
|
The company plans to manufacture 200 units of the mid-fi receivers and 250 units of the hi-fi receivers.
Requirement
1. Calculate the product cost per unit for both products using activity-based costing.