E4-20A Compute activity rates and unit cost (Learning Objective 2)

Nano produces skin care products. The company uses an activity-based costing system and provides the following activity cost pools and cost drivers for the month of July:

Activity Cost Pool Cost Pool Allocation Rates Labor related ......................... $6.00 per direct labor hour Machine related..................... $3.00 per machine hour Machine setup........................ $50.00 per setup Production orders.................. $120 per order Shipments............................... $80.00 per shipment General factory....................... $5.00 per direct labor hour Nano has gathered the cost and activity data for two products: Product A and Product B. The direct costs and units of production for the two products are as follows:
Product A Product B Direct labor cost per unit....................................... $ 5.00 $ 6.20 Direct materials cost per unit................................. $15.00 $18.00 Number of units produced per month................... 1,000 units 1,100 units Total Expected Activity Product A Product B Direct labor hours................................................... 180 hours 190 hours Machine hours........................................................ 1,600 hours 2,000 hours Machine setup........................................................ 3 setups 1 setup Production orders.................................................. 3 1 Shipments............................................................... 2 1 General factory....................................................... ? ?
Requirements 1. What is the expected activity for general factory for both Product A and Product B?
2. Compute the unit product cost of Product A and Product B.
3. What should the selling price of each product be if the company wishes to have a markup of 50% on both products?