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Computing indirect manufacturing costs per unit
Day, Corp., is considering the use of activity-based costing. The following information is provided for the production of two product lines:
Activity
Cost
Cost Driver
Setup
$ 106,000
Number of setups
Machine maintenance
55,000
Machine hours
Total indirect manufacturing costs
$ 161,000
Product A
Product B
Total
Direct labor hours
6,500
5,500
12,000
20
180
200
Number of machine hours
1,600
2,400
4,000
Day plans to produce 400 units of Product A and 375 units of Product B.
Requirement
1. Compute the ABC indirect manufacturing cost per unit for each product.
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