Question

Value-Stream Costing Objective

During the week of June 12, Harrison Manufacturing produced and shipped 18,200 units of its aluminum wheels: 4,400 units of Model A and 13,800 units of Model B. The following costs were incurred:

	Materials		Salaries/ Wages		Machining		Other		Total Cost
Order processing			$18,800						$18,800
Production planning			136,800						136,800
Purchasing			26,100						26,100
Stamping	$355,000		35,500		$37,600		$19,600		447,700
Welding	160,000		40,000		40,000		12,000		252,000
Cladding	390,000								390,000
Testing			11,000						11,000
Packaging and shipping			9,000						9,000
Invoicing			12,400						12,400
Total	$905,000		$289,600		$77,600		$31,600		$1,303,800

Required:

1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost. Round your answer to the nearest dollar amount.
$ per unit

2. Calculate the unit cost for Models A and B. Round your answers to the nearest dollar amount.

	Unit Cost
Model A	$
Model B	$

3. What if Model A is responsible for 40 percent of the materials cost? Calculate the unit materials cost for Models A and B. Round your answers to the nearest dollar amount.

	Unit Cost
Model A	$
Model B	$

Calculate the total unit cost for Models A and B. Round your interim calculations and final answers to the nearest dollar amount.

	Unit Cost
Model A	$
Model B	$

Answer 1

Part- A & B

Unit Cost := Total Cost / Total Unit

=1303800/(4400+13800)= $71.64

Eac Model A & B will be the same cost $71.64

Part-C

Model A ( Unit Material Cost )= Total Cost/ Total Unit

(905000*40%)/4400= $82.27

Model B ( Unit Material Cost )= Total Cost/ Total Unit

(905000*60%)/13800= $39.35

Computation of Connversion Cost

Unit Conversion Cost =Total Cost/ Total Unit

=(1303800-905000)/(4400+13800)= $21.91

Computation of Total Unit cost
Particular	Material Cost	Conversion Cost	Total
Model A	$82	$22	$104
Model B	$39	$22	$61