Calculate the manufacturing cost per unit for each product

Reference no: EM131983604

Problem

Sullivan Company produces mathematical and financial calculators and operates at capacity. Data related to the two products follows.

	Mathematical	Financial
Annual production in units	25,000	50,000
Direct materials cost	$75,000	$150,000
Direct manufacturing labor cost	$25,000	$50,000
Direct manufacturing labor-hours	1,250	2,500
Machine-hours	40,000	70,000
Number of production runs	50	50
Inspection hours	1,200	800

Total manufacturing overhead costs? are:

                             Total
Machining costs       $440,000
Setup costs            110,000
Inspection costs      120,000

Requirements

1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.

2. Compute the manufacturing cost per unit for each product.

3. How might Sullivan?'smanagers use the new cost information from its?activity-based costing system to better manage its? business?

Reference no: EM131983604

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