Value$-$Stream Costing

Henderson, Inc., has just created five order fulfillment value streams, two focused and three that produce multiple products. The size of the plant in which the value streams are located is $100,000$ square feet. The facility costs total $$1,000,000$ per year. One of the focused value streams produces a basic MP$3$ product. The MP$3$ value stream occupies $20,000$ square feet. Not counting facility costs, the MP$3$ value$-$stream costs total $$1,800,000.$ There are $25,000$ MP$3$ units produced annually. There were not sufficient quality personnel for each value stream; thus, the MP$3$ stream had to share a quality engineer who spends $40$ percent of his time with the MP$3$ value stream and the other $60$ percent with two other value streams. While $40$ percent of the time is not sufficient time for the value streams, the contribution will be workable until other arrangements can be made. His salary is $$75,000$ per year. Vivian Olsen, an industrial engineer, is one of two employees assigned completely to the value stream from production planning. Vivian has not been with the company as long as the other production engineer. Because of the demand$-$pull nature of the new value stream, only one production planner is needed.

Required:

Calculate the unit product cost for the MP$3$ value stream.

$x$ per unit

Feedback

Check My Work

What are the total costs of the product? How many units were produced? Consider requirement $1$ when ascertaining the accuracy of the cost.