ABC, process costing. Parker Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here:
|
Mathematical |
Financial |
|
|
Annual production in units |
50,000 |
100,000 |
|
Direct material costs |
$150,000 |
$300,000 |
|
Direct manufacturing labor costs |
$ 50,000 |
$100,000 |
|
Direct manufacturing labor hours |
2,500 |
5,000 |
|
Machine hours |
25,000 |
50,000 |
|
Number of production runs |
50 |
50 |
|
Inspection hours |
1,000 |
500 |
Total manufacturing overhead costs are as follows:
|
Total |
|
|
Machining costs |
$375,000 |
|
Setup costs |
120,000 |
|
Inspection costs |
105,000 |
1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.
2. Compute the manufacturing cost per unit for each product.