Under Activity-Based Costing, how do you find the total product cost per unit fo

Question

Under Activity-Based Costing, how do you find the total product cost per unit for the standard and deluxe?

. LO 2 Walker Texas produces two kinds of recliners, Standard and Deluxe. Information about the two products follows Deluxe Standard 15,000 30,000 $ 125 S 80 $ 30 S 10 Direct labor hours required for production 45,000 30,000 Machine hours required for production 60,000 45,000 1,000 1,000 Units produced Direct materials cost per unit Direct labor cost per unit Batches Production costs are as follows: Activity Cost Activity Driver Machining S 840,000 Machine hours Moving/warehousing S510,000 Batches Total overhead cost $1,350,000

Explanation / Answer

Answer:-

Explanation:-Activity rate:-

Machining =Overhead cost/Machine hours

=$840000/60000+45000

=$840000/105000 machine hours = $8 per machine hour

Moving/warehousing = Overhead cost/No. of batches

=$510000/2000 batches =$255 per batch

Walker Taxes Calculation of Product csot per unit Activity Based costing method Particulars Deluxe Standard $ $ Direct material cost 15000 units*$125 per unit=1875000 30000 units*$80 per unit=2400000 Direct labor cost 15000 units*$30 per unit=450000 30000 units*$10 per unit=300000 Machining cost 60000 hours*$8 per hour=480000 45000 hours*$8 per hour=360000 Moving/Warehousing 1000 batches*$255 per batch=255000 1000 batches*$255 per batch=255000 Total product cost (a) 3060000 3315000 Units produced (b) 15000 30000 Product cost per unit (c=a/b) 204 110.5

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