Question

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:

Stream Activities
Cell manufacturing	2,415	min.	7,245	min.	$	67,620
Engineering	70	hrs.	294	hrs.		32,760
Testing	95	hrs.	228	hrs.		23,579
Total					$	123,959

1. Calculate the ABC product cost for Models A and B. If required, round your answers to the nearest cent.

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

Answer 1

STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL
			Activity	Total	Expected	Activity
ACTIVITY COST POOL			Measures	Overheads	Activity	Rate
Cell Manufacturing			Min	67,620	9,660	7.00
Engineering			Hrs	32,760	364	90.00
Testing			Hrs	23,579	323	73.00
Total Product cost
Activity		Rate	Deluxe		Basic
			Activity	OH	Activity	OH
Cell Manufacturing		7	2415	16,905	7,245	50715
Engineering		90	70	6,300	294	26460
Testing		73	95	6,935	228	16644
		Total Cost		30,140		93819
Req 3.
		Deluxe	Basic
Total cost		30140	93819
Divide: Number f units		50	150
Cost per unit		602.8	625.46