Question

Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Labor-related $ 8.00 per direct labor-hour Machine-related $ 9.00 per machine-hour Machine setups $ 80.00 per setup Production orders $ 200.00 per order Shipments $ 190.00 per shipment General factory $ 9.00 per direct labor-hour Cost and activity data have been supplied for the following products: J78 B52 Direct materials cost per unit $ 7.50 $ 44.00 Direct labor cost per unit $ 4.50 $ 4.00 Number of units produced per year 1,000 400 Total Expected Activity J78 B52 Direct labor-hours 1,100 30 Machine-hours 2,300 30 Machine setups 5 2 Production orders 4 2 Shipments 12 2 Required: Compute the unit product cost of each product listed above. (Round your answers to 2 decimal places.)

Answer 1

1COMPUTATION OF UNIT PRODUCT COST OF PRODUCTS: (amount in $ )

PRODUCT : J78 B52 COST DRIVER RATE

Number of units 1000 400 -

material cost (7.5*1000) = 7500 = 17600 (44*400) -

direct labour cost (4.5*1000) =4500 =1600 (4*400) -

labour related cost (8*1100) =8800 =240 (8*30 ) labour hour rate

machine related cost ( 9*2300) =20700 =270 (9*30 ) machine hour rate

production ordering cost (200*4) =800 =400 (200*2) cost per order

machine setup (80*5 ) =400 =160 (80*2 ) cost per setup

shipments cost (190*12) =2280 =380 (190*2) cost per shipment

general factory (9*1100) =9900 =270 (9*30) cost per labour hour

= 54880 = 20920

cost per unit (54880/1000) =54.88 = 52.3 (20920/400)