Question

Jones Corp. manufactures mid-fi and hi-fi stereo receivers. The following data have been summarized: (Click the icon to view the data.) The company plans to manufacture 100 units of the mid-fi receivers and 250 units of the hi-fi receivers. Calculate the product cost per unit for both products using activity-based costing. (Round your answers to the nearest cent.) Begin by selecting the formula to allocate overhead (OH) costs. Allocated mfg. overhead costs Compute the overhead costs allocated to Mid-Fi, and then compute the overhead cost per unit for Mid-Fi. Next, compute the overhead costs allocated to Hi-Fi then compute the overhead cost per unit for Hi-Fi. (Round the cost per unit to the nearest cer Mid-Fi Hi-Fi Setup Inspections Machine maintenance Total overhead costs Number of units Overhead cost per unit Now calculate the product cost per unit for both products. (Enter your answers to the nearest cent.) Mid-Fi Hi-Fi Direct materials cost per unit Direct labor cost per unit Indirect manufacturing cost per unit Total product cost per unit

Answer 1

Allocated Manufacturing Overhead Costs = Predetermined Overhead Allocation Rate * Actual Quantity of Allocation Base Used

Particulars	Mid-Fi	Hi-Fi
Setup	48,000	48,000
Inspections	49,500	4,500
Machine Maintenance	12,800	9,200
Total Overhead Costs	110,300	61,700
Number of Units	100	250
Overhead Cost per Unit	1,103	246.80

Notes

For Mid-Fi

Set-up Costs = 30 Setups * $ 1600 per Setup = $ 48,000

Inspection = 55 Inspection Hours * $ 900 per Inspections = $ 49,500

Machine Maintenance = 1,600 Machine Hours * $ 8 per Machine Hour = $ 12,800

For Hi-Fi

Set-up Costs = 30 Setups * $ 1600 per Set-up = $ 48,000

Inspection = 5 Inspection Hours * $ 900 per Inspection Hour = $ 4,500

Machine Maintenance = 1,150 Hours * $ 8 per Machine Hour = $ 9,200

Calculation of Product Cost per Unit

Particulars	Mid-Fi	Hi-Fi
Direct Materials Per Unit	900	1,300
Direct Labour Per Unit	400	100
Indirect Manufacturing Costs per Unit	1,103	246.80
Product Cost per Unit	2,403	1,646.80

Product Costs per Unit = Direct Materials Per Unit + Direct Labour per Unit + Indirect Manufacturing Costs per Unit