Friedman Company uses JIT manufacturing. There are several manufacturing cells set up within one of its factories. One of the cells makes stands for flat-screen televisions. The cost of production for the month of April is given below.
Cell labor ....... $ 60,000
Direct materials ........ 150,000
Overhead ........ 120,000
Total .......... $330,000
During May, 30,000 stands were produced and sold.
Required:
1. Explain why process costing can be used for computing the cost of production for the stands.
2. Calculate the cost per unit for a stand.
3. Explain how activity-based costing can be used to determine the overhead assigned to the cell.