Question

Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow.

                            V-1     V-2

Units produced                 10,000 1,000
Direct materials cost per unit $ 2    $ 4
Machine hours per unit 1    2
Production runs per month     80 40

Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow.

Machine depreciation $ 75,000
Setup labor 33,600
Material handling 17,520
Total $ 126,120

Required:

a. Compute the unit costs for the two products V-1 and V-2 using the current costing system at Upriver (using machine hours as the allocation basis). (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. Compute the unit costs for the two products V-1 and V-2 using the proposed ABC system at Upriver. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Answer 1