Cornerstone Exercise 15.2 (Algorithmic) Value-Stream Costing Objective

During the week of June 12, Harrison Manufacturing produced and shipped 18,600 units of its aluminum wheels: 5,000 units of Model A and 13,600 units of Model B. The following costs were incurred:

	Materials		Salaries/ Wages		Machining		Other		Total Cost
Order processing			$19,000						$19,000
Production planning			205,800						205,800
Purchasing			22,500						22,500
Stamping	$360,000		36,000		$36,000		$20,000		452,000
Welding	150,000		41,000		12,000		244,000		745,000
Cladding	10,000								10,000
Testing			8,000						8,000
Packaging and shipping			8,000						8,000
Invoicing			15,000						15,000
Total	$1,255,000		$357,300		$77,000		$32,000		$1,721,300

Required:

1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost. $ per unit

2. Calculate the unit cost for Models A and B.

	Unit Cost
Model A	$
Model B	$

3. What if Model A is responsible for 40 percent of the materials cost? Calculate the unit materials cost for Models A and B.

	Unit Cost
Model A	$
Model B	$

Calculate the total unit cost for Models A and B.

	Unit Cost
Model A	$
Model B	$