(Appendix 5B) Value-Stream Product Costing During the week of May 10, Hyrum Manufacturing produced and shipped 16,000 units of its aluminum wheels: 4,000 units of Model A and 12,000 units of Model B. The cycle time for Model A is 1.09 hours and for Model B is 0.47 hour. The following costs and production hours were incurred:

Required:
1. Assume that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy.
2. Assume that Model A is responsible for 40% of the materials cost. Calculate the unit cost for Models A and B, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation.
3. Calculate the unit cost for the two models, using DBC. Explain why this cost is more accurate than the unit cost calculated in Requirement 2

Hyrum Manufacturing Value-Stream Costs and Production Hours This Week, May 10 Net Hours Materials Salaries/Wages Machining Other Order processing 1,600 $ 18,000 Total Cost $ 18,000 Production planning 100 36,000 36,000 Purchasing 800 27,000 27,000 Stamping 2,000 $267,000 145,500 $36,000 $18,000 466,500 Welding 2,400 100,000 42,000 42,000 12,000 196,000 Cladding 500 75,000 50,000 125,000 Inspection 600 10,500 10,500 Packaging and shipping 600 9,000 9,000 Invoicing 1,400 12,000 12,000 Totals 10,000 $442,000 $350,000 $78,000 $30,000 $900,000