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	2,415	min.	7,245	min.	$	96,600
Engineering	70	hrs.	294	hrs.		32,032
Testing	110	hrs.	352	hrs.		36,498
Total					$	165,130

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.

- Select your answer -The two value-stream products are similarThe two value-stream products are not similarNot enough information is given to answer