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 Activity Rates Labor-related $ 4.00 per direct labor- hour Machine- $ related 8.00 per machine-hour Machine $ 40.00 per setup setups Production orders $200.00 per order Shipments $190.00 per shipment General factory $ 8.00 per direct labor- hour Cost and activity data have been supplied for the following products: J78 B52 Direct materials cost per unit Direct labor cost per unit Number of units produced per year $ 5.00 $ 4.25 1,000 $46.00 $ 5.00 200 Direct labor- hours Machine-hours Machine setups Production orders Shipments Total Expected Activity J78 B52 1,300 50 2,600 40 7 4 8 4 12 4 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

B52 46 J78 5 14.25 1300*4 /1000 5 Direct material cost per unit Direct labor cost per unit Labor related activity (total labor hour* cost per labor hour / no. of units) 50* 4/200 =5.2 2600*8/ 1000 40*8/200 Machine related activity( Machine hrs*machine hr rate no. of units) =1.6 =20.8 7*40/1000 4*40/200 Set up cost (No. of set ups* set up cost / no. of units) =0.28 =0.8 Order Cost( NO. of orders* order cost / no. of units) 4*200/ 8*200 / 1000 200 =1.6 I=4 4*190 / 200 =3.8 12*190/ 1000 Shipment cost (No. of shipments*shipment cost / no. of units) =2.28 1300*8/ General Factory Overhead (Direct labor hrs* rate per direct labor hr/ 1000 no. of units) =10.4 UNIT PRODUCT COST $49.81 50*8/200 =2 $64.20

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