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 Labor-related Machine-related Machine setups Production orders Shipments General factory Activity Rates $ 8.00 per direct labor-hour $ 9.00 per machine-hour $ 80.00 per setup $ 200.00 per order $ 190.00 per shipment $ 9.00 per direct labor-hour Cost and activity data have been supplied for the following products: Direct materials cost per unit Direct labor cost per unit Number of units produced per year $ $ J78 7.50 4.50 1,000 B52 $44.00 $ 4.00 400 Total Expected Activity J78 B52 1,100 2,300 Direct labor-hours Machine-hours Machine setups Production orders Shipments NA Required: Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2 decimal places.) J78 B52 Unit product cost

Answer 1

Solution

	J78	B52
Unit product cost	$                    54.88	$                     52.30

Working

	J78	B52
Direct material	$                      7.50	$                     44.00
Direct labor	$                      4.50	$                        4.00
Overheads	$                    42.88	$                        4.30
Total Cost per unit	$                    54.88	$                     52.30

.

Cost assigned to J78
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Labor related	$             8.00	1,100.00	$ 8,800
Machine related	$             9.00	2,300.00	$ 20,700
Machine setup	$           80.00	5.00	$ 400
Production orders	$        200.00	4.00	$ 800
Shipments	$        190.00	12.00	$ 2,280.00
General factory	$             9.00	1,100.00	$ 9,900.00
Total Overheads assigned			$ 42,880
Production			1,000.00
Overhead cost per unit			$ 42.88

.

Cost assigned to B52
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Labor related	$             8.00	30	$ 240
Machine related	$             9.00	30	$ 270
Machine setup	$           80.00	2	$ 160
Production orders	$        200.00	2	$ 400
Shipments	$        190.00	2	$ 380
General factory	$             9.00	30	$ 270
Total Overheads assigned			$ 1,720
Production			400.00
Overhead cost per unit			$                 4.30