Broomfield company budgeted 7200000 of manufacturing

Reference no: EM13606400

Broomfield Company budgeted $7,200,000 of manufacturing overhead for the current year, and 50,000 hours of direct labor (cost of $60/hour). Production of Product X (100,000 units) consumed $200,000 of direct materials, and 8,000 direct labor hours.

Assume that Broomfield uses an ABC system, with three cost drivers: machine hours, materials handling, and setups. Of the total overhead cost, 55% is in the machine hour pool (40,000 budgeted hours), 25% is in the materials pool (allocated based on dollars of raw materials used ($1,600,000 total)), and 20% in the setup pool (100 budgeted setups). In addition to the materials and labor listed above, Product X used 5,500 machine hours and 14 setups. Compute the unit cost of Product X under the ABC system.

Reference no: EM13606400

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