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	2,355	min.	7,065	min.	$	75,360
Engineering	50	hrs.	160	hrs.		18,060
Testing	95	hrs.	209	hrs.		23,408
Total					$	116,828

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	________
Model B	________

2a. Calculate the value-stream average product cost. If required, round your answer to the nearest cent. ________ Per Unit

2b. Assuming reasonable stability in the consumption patterns of the products and product mix, assess how well the products are grouped based on similarity.

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

Answer: The two value-stream products are similar