Calculate the total cost per unit for Chevalier and Dame

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Question - Lyon Productions manufactures two products, Chevalier and Dame. Estimates for the company's products for next year are provided below:

 

Chevalier

Dame

Estimated Production Volume

6000

4000

Direct Material

$30/unit

$50/unit

Direct Labour Per Unit

3 hours @ $12 / hour

4 hours @ $12 / hour

The company's estimated overhead of $400 000 can be identified with three major activities: order processing ($75 000), machine processing ($280 000) and product inspection ($45 000). These activities are driven by number of orders processed, machine hours, and inspection hours respectively. Estimated activity levels for the next year are as follows:

 

Chevalier

Dame

Total

Orders Processed

300

200

500

Machine Hours

36000

44000

20000

Inspection Hours

4000

16000

20000

Required - Assuming that Lyon Productions uses activity-based costing (ABC) to apply overhead to production, calculate the total cost per unit for Chevalier and Dame if the estimated production volume is attained.

Reference no: EM132844064

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