Question

Drilling Company uses activity-based costing and provides this information: Manufacturing activity Materials handling Machinery Assembly Inspection Cost Driver Number of parts Number of machine hours Number of parts Number of finished units Driver Rate $ 0.6 53 2.95 32 Drilling has just completed 82 units of a component for a customer. Each unit required 102 parts and 3.10 machine hours. The prime cost is $1,320 per finished unit. All other manufacturing costs are classified as manufacturing overhead. Required: 1. Compute the total manufacturing costs and the unit costs of the 82 units just completed using ABC costing. 2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $182 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $302 per unit. Compute the full product cost per unit, including upstream, manufacturing, and downstream activities. Also compute the relative proportion of each main cost category. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the total manufacturing costs and the unit costs of the 82 units just completed using ABC costing. (Round your intermediate and final answers to 2 decimal places.) Total manufacturing cost Manufacturing cost per unit Required Required 2 >

Answer 1

Page No.1 82 No. of Units produced No. of ports required to produce one unit: 102 Therefore no. of parts required unit -10 pro dule are - 820 X 102 8364 No. of machine hours & = 83 x 3.10 = 254.2 hours - Prime cost one hit is 1320 $ No. of units x time taken to produce one unit cost of producing total prime cost - No. of units produced & Prime cost per Chit 1320 x 82 = 1082uo manufacturing overheads= material handling cost + machinery assembling cost + Inspection. total material handling cost a cost driver rate No. of parts dashboldSUP SHOW TAKO 0.6 X 8 364 = 5018.4 cost Driver rate & mo. of Howry total machinery lost a 53 xasu, 2 = 134 72.6 a) total Assembling lost - st Driver date x No. of partits 24673.8 2.95 x 8364 =

total Inspection wort Page no. 2 2 Wit Driver Rate x Mo. of finished umit. 32 X 82 = 2624 - total manufacturing overheads 5018.4 +13472-6 + 24673.8 + 2624 - 69406.8 Lost 182 per - given upstream activity unit total upstream 182x82 - 14924 activity Lost a 182 X No. of Units = 302 per unit = given Downstream activity cost i total Domstream cost 302 x No. of units, 302 x 82 - 24764 Therefore Hotal manufacturing cost prime lost t manufacturing overheads + upstream and down stream Lost - 108240 + 69406.8 + 14924 +24764 217334.8 manufacturing cost per unot total manufacturing cost No. of units produced 21733 4.8 2650.42 19 82