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: points Activity Cost Pool Labor-related Machine-related Machine setups Production orders Shipments General factory Activity Rates $ 7.00 per direct labor-hour $ 5.00 per machine-hour $ 40.00 per setup $ 200.00 per order $ 120.00 per shipment $ 5.00 per direct labor-hour eBook Cost and activity data have been supplied for the following products: References 352 Direct materials cost per unit Direct labor cost per unit Number of units produced per year $ $ 378 7.00 4.00 2.000 $50.00 $10.00 100 Total Expected Activity J78 1.000 3,400 Direct labor-hours Machine-hours Machine setups Production orders Shpesents Required: Compute the unit product cost of each product listed above. (Do not round Intermediate calculations. Round your answers to 2 decimal places.) JTE 852 Unit product cost < Prev 4 a 11 Next >

Answer 1

Solution:

Allocation of overhead and computation of overhead cost per unit
Activity	Activity Base	Activity Rate	J78		B52
			Usage	Allocated Costs	Usage	Allocated Costs
Labor related	Direct labor hour	$7.00	1000	$7,000	20	$140
Machine related	Machine hours	$5.00	3400	$17,000	20	$100
Machine setups	Nos of setups	$40.00	8	$320	2	$80
Production orders	Nos of orders	$200.00	6	$1,200	2	$400
shipments	Nos of shipments	$120.00	7	$840	2	$240
General facotry	Direct labor hour	$5.00	1000	$5,000	20	$100
Total				$31,360		$1,060
Nos of units				2000		100
Overhead cost per unit				$15.68		$10.60

Computation of unit cost of each product - Activity Based costing
Particulars	J78	B52
Direct material	$7.00	$50.00
Direct labor	$4.00	$10.00
Manufacturing overhead	$15.68	$10.60
Unit Product Cost	$26.68	$70.60