NUMBER OF CUSTOMERS SERVED: The need to expedite production increases as the number of customers served...

 

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NUMBER OF CUSTOMERS SERVED: The need to expedite production increases as the number of customers served by the company increases. Thus, the number of customers served by ADA is a good measure of expediting production orders. Takedo gathered the following information about the cost driver volume for each product: Setup hours Number of workers Diomycin 185 Homycin 585 Addolin 785 185 385 585 Direct labor hours 7,170 6,770 Inspection hours 135 185 1,970 685 Customers served 42 97 485 Required: 1. Use the firm's current traditional costing system that uses direct labor hours as the allocation base to calculate the unit cost of each product. 2. Use the activity-based costing system to calculate the unit cost of each product. NUMBER OF CUSTOMERS SERVED: The need to expedite production increases as the number of customers served by the company increases. Thus, the number of customers served by ADA is a good measure of expediting production orders. Takedo gathered the following information about the cost driver volume for each product: Setup hours Number of workers Diomycin 185 Homycin 585 Addolin 785 185 385 585 Direct labor hours 7,170 6,770 Inspection hours 135 185 1,970 685 Customers served 42 97 485 Required: 1. Use the firm's current traditional costing system that uses direct labor hours as the allocation base to calculate the unit cost of each product. 2. Use the activity-based costing system to calculate the unit cost of each product.