Prince Rupert company manufactures product A. B, C and D. Data for the year ended Dec 31,
Question:
- Prince Rupert company manufactures product A. B, C and D. Data for the year ended Dec 31, 2021, is as follows.
Product
Units/ Production
Production run
Cost of material per unit ($)
Direct labourhours required per unit
Machine hours required per unit
A
20
3
80
2
1
B
40
4
60
5
8
C
45
6
70
7
5
D
120
12
65
9
3
Cost of Direct labor per hour: $ 6
Overhead costs for Prince Rupert company.
Set up cost
$ 12,000
Handling material cost
$ 6,000
Scheduling costs
$ 14,000
i. Using the peanut butter costing approach, calculate the cost per unit. (use Direct labor hours as a basis of allocation)
ii. Using ABC Costing, calculate the cost per unit. Please justify why you choose that allocation base.
iii. Show the difference of cost per unit using peanut butter and ABC costing.
Expert Answer:
working notes Estimated overheads Estimated direct labor hours Calculation of total direct labor hou... View the full answer
Cost Accounting A Managerial Emphasis
ISBN: 978-0133138443
7th Canadian Edition
Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham
