GAMMA produces over a hundred different types of residential water faucets at its Delta, Florida, plant. This plant uses activity- based costing to calculate product costs. The following table summarizes the plant€™s overhead for the year and the cost drivers used for each activity center:

One faucet model GAMMA manufactures is Explorer. Its total product cost is as follows:

Required:
Calculate the product cost per unit of the Explorer faucet using absorption costing where plant over-head is assigned to products using direct labordollars.

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Summary of Plant Overhead and Activity Centers Total Cost Millions of Dollars) $20.8 13.8 6.8 10.9 16.2 $68.5 Activity Cost Amount of Cost Driver per Unit of Cost Driver Activity Center Materials handling Purchasing Set-up labor Engineering Cost Driver Direct materials Part numbers Batches Number of products Direct labor $130 million 800 500 125 $90 million $0.16 $17,250 $13.600 $87.200 $0.18 Total plant overhead Activity Cost Amount of pUnit of Cost Driver Cost Driver Total Cost $121.700 Direct labor Direct materials Materials handling Purchasing Setup Engineering Occupancy Total cost Number of units manufactured Product cost per unit 90,500 14,480 155,250 108,800 87.200 21.906 $90.500 $0.16 17.250 13.600 87.200 $0.18 $121,700 $599,836 12,500 47.99