Drilling has just completed 70 units of a component for a customer. Each unit required 90 parts
Question:
Drilling has just completed 70 units of a component for a customer. Each unit required 90 parts and 2.50 machine hours. The prime cost is $1,200 per finished unit. All other manufacturing costs are classified as manufacturing overhead.
Manufacturing Activity | Cost Driver | Driver Rate |
---|---|---|
Materials handling | Number of parts | $ 0.70 |
Machinery | Number of machine hours | 41.00 |
Assembly | Number of parts | 2.35 |
Inspection | Number of finished units | 20.00 |
Required:
1. Compute the total manufacturing costs and the unit costs of the 70 units just completed using ABC costing.
2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $170 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $290 per unit. Compute the full product cost per unit, including upstream, manufacturing, and downstream activities. Also compute the relative proportion of each main cost category.
Cost Management A Strategic Emphasis
ISBN: 978-0078025532
6th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins