Using automated production processes, Pruitt Videos produces two models of digital camcorders: N100 for the novice and D200 for the hobbyist. The company has found activity-based costing useful in assigning overhead costs to its products. It has identified the following five major activities involved in producing the camcorders:

Activity measures for the two models of camcorders follow:

Required
a. Compute the cost per unit of N100 and D200, assuming that Pruitt made 5,000 units of N100 and 2,500 units of D200.
b. Explain why the D200 camcorders cost more to make although their direct costs are less than those for the N100 camcorders.

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Activity Allocation Base Allocation Rate Materials receiving and handling Production setup Assembly Quality inspection Packing and shipping Cost of materials Number of setups Number of parts Inspection time Number of orders 3% of materials cost $400 per setup $5 per part $12.50 per minute $40 per order Labor Cost Materials NumberNumber Inspection Number Cost of Setups 10 25 of Parts Time of Orders 800 min. N100 D200 $125,000 80,000 $70,000 10,000 10,000 4,800 min 25 50 Both are direct costs.