Question

Direct Labor-Hours per unit 0.30 0.50 Annual Production 27,000 units 75,000 units Rims Posts Additional information about the company follows: a. Rims require $12 in direct materials per unit, and Posts require $10. b. The direct labor wage rate is $20 per hour. c. Rims are more complex to manufacture than Posts and they require special equipment. d. The ABC system has the following activity cost pools: Estimated Activity Activity Cost Pool Machine setups Special processing General factory Posts 50 Estimated Overhead Cost $ 30,000 $ 121,500 $ 756,000 Activity Measure Number of setups Machine-hours Direct labor-hours Rims 100 6,000 9,000 Total 150 6,000 54,000 45,000

Answer 1

Calculate unit product cost

	Rims	Posts
Machine setup	20000	10000
Special processing	121500	0
General factory	126000	630000
Total	267500	640000
Unit	27000	75000
Overhead cost per unit	9.91	8.53
Direct material	12	10
Direct labor	6	10
Unit product cost	27.91	28.53