Lyon Productions manufactures two products, Chevalier and Dame. Estimates for the company's products for next year are provided below:

Chevalier  Dame

Estimated Production Volume60004000

Direct Material$30/ unit$50 / unit

Direct Labour Per Unit3 hours @ $12 / hour4 hours @ $12 / hour

The company's estimated overhead of $400 000 can be identified with three major activities: order processing ($75 000), machine processing ($280 000) and product inspection ($45 000). These activities are driven by number of orders processed, machine hours, and inspection hours respectively. Estimated activity levels for the next year are as follows: 

ChevalierDameTotal

Orders Processed 300200500

Machine Hours360004400020000

Inspection Hours40001600020000

Required:

Assuming that Lyon Productions uses activity-based costing (ABC) to apply overhead to production, calculate the total cost per unit for Chevalier and Dame if the estimated production volume is attained. 

Answer rating: 100% (QA)

Calculating Total Cost per Unit for Chevalier and Dame using ActivityBased Costing ABC Step 1 Cost P... View the full answer