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Total costs $ Given the following information at the end of year 2019: Activity Cost driver Product A Product B Direct materials $400,000 $ 350,000 Direct labor $120,000 $ 95,000 Design # of designs 2 Setup batch 70 Plant administration hour 1,560 2,600 Number of units 6,000 3,000 4 130 $167,000 $65,000 $225,000 Using activity based costing, the allocated overhead cost per unit of product is 7 ? ? IEE P
Total costs $ Given the following information at the end of year 2019: Activity Cost driver Product A Product B Direct materials $400,000 $ 350,000 Direct labor $120,000 $ 95,000 Design # of designs 2 Setup batch 70 Plant administration hour 1,560 2,600 Number of units 6,000 3,000 4 130 $167,000 $65,000 $225,000 Using activity based costing, the allocated overhead cost per unit of product is 7 ? ? IEE P
Expert Solution
Answer
| Calculation of Total cost & Cost per unit | ||||
| Product-A (6000 units) | Product -B (3000 units) | |||
| Total | Per unit | Total | Per unit | |
| Direct Material | $ 400000 | 66.6666667 | $ 350000 | 116.6667 |
| Direct Labour | $ 120000 | 20 | $ 95000 | 31.66667 |
| Deisign | $133600 | 22.2666667 | $33400 | 11.13333 |
| Set up | $ 42250 | 7.04166667 | $ 22750 | 7.583333 |
| Plant administration | $ 84375 | 14.0625 | $ 140625 | 46.875 |
| Total | 780225 | 130.0375 | 641775 | 213.925 |
| WORKING NOTES | ||||
| Allocation of cost based on Activity Cost Method | ||||
| Particulars | Total Cost | Cost Driver | Cost Driver per unit | |
| Design | 167000 | Number of Design | (167000 / (24000+6000) | 5.566667 |
| Set up | 65000 | Batch | (65000/(130+70) | 325 |
| Plant administration | 225000 | Hour | (225000/(1560+2600) | 54.08654 |
| Product-A | Product -B | |||
| Number of units | 6000 | 3000 | ||
| Number of design | 4 | 2 | ||
| Total | 24000 | 6000 |
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