Question

Saved Paparo Corporation has provided the following data from its activty-based costung system: Activity Cost Poo Assembly Processing orders Inspection Total Cost Total Activity $ 1,005,900 60,000 machine-hours $ 83,930 2,200 orders $106,960 1,400 inspection-hours Data concerning the company's product Q79Y appear below Annual unit production and sales Annual machine-hours Annual number of orders Annual inspection hours Direct materials cost Direct labor cost 350 1,180 100 40 $55.e0 per unit $41.25 per unit According to the activity-based costing system, the average cost of product Q79Y Is closest to: Mutiple Cholce S68.52 per unit Mavi sBeaconTeach..zip eaconTeach.. .zip ch the web and Windows

Answer 1

Activity Rate:

Assembly:

Cost = $1,005,000
Number of machine-hours = 60,000

Cost per machine-hours = $1,005,000 / 60,000
Cost per machine-hours = $16.75

Processing Orders:

Cost = $83,930
Number of orders = 2,200

Cost per orders = $83,930 / 2,200
Cost per orders = $38.15

Inspection:

Cost = $106,960
Number of inspection-hours = 1,400

Cost per inspection-hours = $106,960 / 1,400
Cost per inspection-hours = $76.40

Product Q79Y:

Number of machine-hours = 1,100
Number of orders = 100
Number of inspection-hours = 40

Overhead = $16.75 * 1,100 + $38.15 * 100 + $76.40 * 40
Overhead = $25,296

Number of units = 350

Overhead per unit = $25,296 / 350
Overhead per unit = $72.27

Cost per unit = Direct materials cost per unit + Direct labor cost per unit + Overhead per unit
Cost per unit = $55.00 + $41.25 + $72.27
Cost per unit = $168.52