Question

Dobles Corporation has provided the following data from its activity-based costing system:

Activities	Estimated Overhead Cost	Expected Activity
Assembly	$963,460	67,000	machine-hours
Processing orders	$91,485	1,900	orders
Inspection	$130,944	1,860	inspection-hours

  

The company makes 440 units of product D28K a year, requiring a total of 700 machine-hours, 41 orders, and 11 inspection-hours per year. The product's direct materials cost is $35.86 per unit and its direct labor cost is $29.60 per unit.

According to the activity-based costing system, the unit product cost of product D28K is closest to:

$94.58 per unit

$84.78 per unit

$65.46 per unit

$92.96 per unit

Answer 1

Cost per unit for D28K		Answer: 94.58 per unit
	Rate	Units	Amount
Direct Material	35.86	440	15,778
Direct Labor	29.6	440	13,024
Overheads	Refer below for calculation		12,815
Cost for producing 440 units (A)			41,617
Cost for producing 1 unit [(A)/440 units]			94.58
Overhead Costs for D28K
Activity	Hours/orders	Rate calculated below	Total
Assembly Hours	700	$                             14.38	$                                       10,066
Processing orders	41	$                             48.15	$                                          1,974
Inspection Hours	11	$                             70.40	$                                             774
		Total overheads	12,815
Activities	Estimated Overhead costs (a)	Expected Activity (b)	Amount per activity (a)/(b)	Unit
Assembly	$                                          963,460	67000	$                                          14.38	Per Hour
Processing orders	$                                            91,485	1900	$                                          48.15	Per Order
Inspection	$                                          130,944	1860	$                                          70.40	Per Hour