Computing indirect manufacturing costs per unit Day, Corp., is considering the use of activity based costing. The following information is provided for the production of two product lines:
|
Activity |
Cost |
Cost Driver |
|
Setup |
$106,000 |
Number of setups |
|
Machine maintenance |
55,000 |
Machine hours |
|
Total indirect manufacturing costs |
$161,000 |
|
|
|
Product A |
Product B |
Total |
|
Direct labor hours |
6,500 |
5,500 |
12,000 |
|
Number of setups |
20 |
180 |
200 |
|
Number of machine hours |
1,600 |
2,400 |
4,000 |
Day plans to produce 400 units of Product A and 375 units of Product B.
Requirement
1. Compute the ABC indirect manufacturing cost per unit for each product.