Grace Ltd uses an activity-based costing system. It has the following manuc1urin

Question

Grace Ltd uses an activity-based costing system. It has the following manuc1uring activity areas, related drivers used as allocation bases, and cost allocation rates: During the month. 100 units were produced. requiring two setups. Each unit consisted of 22 parts. used 1.5 direct labour hours, and 1.25 machine hours. Direct materials cost $80 per finished unit All other manufacturing costs are classified as conversion costs ABC costs for research and marketing costs are $140. AU other non-manufacturing ABC costs are $320 per unit. Required a) Calculate the manufacturing cost per unit for the period. b) Calculate the total cost (manufacturing and non-manufacturing costs) per unit for the period.

Explanation / Answer

100 units*712.60=71,260.00

Cost dirivers Cost allocation rate Cost per unit Total No. of set ups 25.00 1.00 25.00 No. of parts 0.30 22.00 6.60 Machines hours 16.00 1.25 20.00 Direct labour hours 14.00 1.50 21.00 No. of finished units 8.00 80.00 640.00 Total manufacured cost per unit 712.60

100 units*712.60=71,260.00

Total Manufacturing cost+research and marketing cost 852.6 Non manufacturing cost 320 per units

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