Calculate the cost per unit

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Reference no: EM133162210

Question - Prince Rupert Company manufactures product A. B, C and D. Data for the year ended Dec 31, 2021, is as follows.

Product

Units/ Production

Production run

Cost of material per unit ($)

Direct labour hours required per unit

Machine hours required per unit

A

20

3

80

2

1

B

40

4

60

5

8

C

45

6

70

7

5

D

120

12

65

9

3

Cost of Direct labor per hour: $ 6

Overhead costs for Prince Rupert company.

Set up cost

$12,000

Handling material cost 

$6,000

Scheduling costs

$14,000

Required -

1. Using the peanut butter costing approach, calculate the cost per unit. (use Direct labor hours as a basis of allocation)

2. Using ABC Costing, calculate the cost per unit. Please justify why you choose that allocation base.

3. Show the difference of cost per unit using peanut butter and ABC costing.

Reference no: EM133162210

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