Question

Belsky Corporation manufactures sports equipment and sells its products to retail stores. Belsky has provided the following data concerning the activity rates it uses in its activity-based costing system when manufacturing high-quality camp stoves. Cost Pool Activity Rate Assembly. $10.81 per Mach. Hr Processing orders $35.34 per order Inspection $69.70 per inspection Activity for 490 Stoves 1080 machine hours 60 orders 20 inspections Total (490 stoves) Total Cost (490 stoves) $11,674.80 $ 2,120.40 $ 1,394.00 $15,189.20 Each camp stove's direct materials cost is $46.42 per unit and direct labor cost of $20.22 per unit. The average cost to product one camp stove is closest to: $97.64 per unit $66.64 per unit $31.00 per unit $57.80 per unit

Answer 1

Ans.	Option    1st    $97.64 per unit
	*First we need to calculate the overhead cost per unit.
	Particulars	Per unit
	Total overhead cost	$15,189
	(/)Number of units	490
	Overhead cost per unit	$31.00
	*Now we can compute the average cost to produce one camp stove by the following way:
	Particulars	Per unit
	Direct materials cost per unit	$46.42
	Direct labor cost per unit	$20.22
	Overhead cost per unit	$31.00
	Average cost per unit	$97.64
	*Total cost per unit includes materials, labor and overhead cost per unit.