Baden-Mbel GmbH manufactures a variety of prestige boardroom chairs. Its job-costing system was designed using an activity-based

Baden-Möbel GmbH manufactures a variety of prestige boardroom chairs. Its job-costing system was designed using an activity-based approach. There are two direct-cost categories (direct materials and direct manufacturing labour) and three indirect-cost pools. These three cost pools represent three activity areas at the plant:

Two styles of chairs were produced in March, the executive chair and the chairman chair. Their quantities, direct material costs and other data for March 2008 are as follows:

The direct manufacturing labour rate is €2 per hour. Assume no opening or closing stock.
Required
1. Calculate the March 2008 total manufacturing costs and unit costs of the executive chair and the chairman chair.
2. Suppose that the upstream activities to manufacturing (R&D and design) and the downstream activities (marketing, distribution and customer service) were analyzed. The unit costs in 2008 were budgeted to be as follows:

Calculate the full product costs per unit of each line of chairs. (Full product costs are the sum of the costs in all business function areas.)

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Manufacturing activity area Budgeted costs for 2008as allocation base Cost driver used Cost-allocation rate Materials handling Cutting Assembly 2160000 2000000 Parts Parts Direct manufacturing 0.25 2.50 25.00 labour-hours Units produced Direct material costs Number of parts Direct manufacturing labour-hours }.Χい龟-IIİİVi. 4.hail Chairman chai 6600000 25000 100000 3 500 7 500 100 Upstream activities Downstream activities Executive chair Chairman chair E60 146 110 236