What is the unit cost for Subassembly A, using direct labour hours to assign overhead? Milan Machining

What is the unit cost for Subassembly A, using direct labour hours to assign overhead?

 

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Milan Machining Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Activity Driver Number of setups Inspection hours Machine hours Number of parts Expected Cost Activity Capacity Setting up Inspecting Grinding Receiving $60,000 $45,000 $90,000 36,000 300 4,500 18,000 50,000 The company produces several different machine subassemblies used by other manufacturers. Information on separate batches for two of these subassem- blies follows: Subassembly A Subassembly B Direct materials Direct labour Units completed. Number of setups Inspection hours Machine $850 $600 100 $950 $600. 50 1 1. 4 ours Parts used 20 30 20 40 The company's normal activity is 20,000 direct labour hours. Each batch uses 50 hours of direct labour. Upon investigation, you discover that Receiving employs one worker, who spends 75 percent of her time on the receiving activity and 25 percent of her time on inspecting products. Her salary is $40,000. Receiving also uses a forklift, at a cost of $6,000 per year for amortization and fuel. The forklift is used only in receiving. Milan Machining Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Activity Driver Number of setups Inspection hours Machine hours Number of parts Expected Cost Activity Capacity Setting up Inspecting Grinding Receiving $60,000 $45,000 $90,000 36,000 300 4,500 18,000 50,000 The company produces several different machine subassemblies used by other manufacturers. Information on separate batches for two of these subassem- blies follows: Subassembly A Subassembly B Direct materials Direct labour Units completed. Number of setups Inspection hours Machine $850 $600 100 $950 $600. 50 1 1. 4 ours Parts used 20 30 20 40 The company's normal activity is 20,000 direct labour hours. Each batch uses 50 hours of direct labour. Upon investigation, you discover that Receiving employs one worker, who spends 75 percent of her time on the receiving activity and 25 percent of her time on inspecting products. Her salary is $40,000. Receiving also uses a forklift, at a cost of $6,000 per year for amortization and fuel. The forklift is used only in receiving.

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