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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:
Total
Orders Processed
300
200
500
Machine Hours
36000
44000
20000
Inspection Hours
16000
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.
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