Exercise 15.9 (Algorithmic) Value-Stream Average Costing, ABC Costs as Benchmarks

A value stream has three activities and two products. The units produced and shipped per week are 50 of the deluxe model (Model A) and 150 of the basic model (Model B). The resource consumption patterns are shown as follows:

	Model A		Model B		Costs of Value- Stream Activities
Cell manufacturing	2,370	min.	7,110	min.	$	75,840
Engineering	55	hrs.	209	hrs.		22,968
Testing	95	hrs.	285	hrs.		29,640
Total					$	128,448

Required:

1. Calculate the ABC product cost for Models A and B. If required, round your answers to the nearest cent.

	Product Cost Per Unit
Model A	$ per unit
Model B	$ per unit

2. Calculate the value-stream average product cost. If required, round your answer to the nearest cent. $ per unit

Assuming reasonable stability in the consumption patterns of the products and product mix, assess how well the products are grouped based on similarity.

A. The two value-stream products are similar

B. The two value-stream products are not similar

C. Not enough information is given to answer