Compute the cost per unit for each product

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Reference no: EM131845623

Kerston Cameras, Inc., manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Kerston uses an activity-based costing system. The following are the relevant cost data for the previous month.

Direct Cost per Unit	Model ZM		Model DS
Direct materials	$	20.5	$	7.0
Direct labor		29.0		9.0

Category	Estimated Cost		Cost Driver	Use of Cost Driver
Unit level	$	25,960	Number of units	ZM: 2,450 units; DS: 9,350 units
Batch level		48,880	Number of setups	ZM: 26 setups; DS: 26 setups
Product level		90,000	Number of TV commercials	ZM: 14; DS: 11
Facility level		180,000	Number of machine hours	ZM: 300 hours; DS: 600 hours

Total	$	344,840

Kerston's facility has the capacity to operate 2,700 machine hours per month.

Required:

a. Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.)

Direct Materials+Direct Labor+Allocated Overhead = Total

b. The current market price for products comparable to Model ZM is $117 and for DS is $34. If Kerston sold all of its products at the market prices, what was its profit or loss for the previous month?

(Round intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)

c. A market expert believes that Kerston can sell as many cameras as it can produce by pricing Model ZM at $112 and Model DS at $33.8. Kerston would like to use those estimates as its target prices and have a profit margin of 20 percent of target prices.

What is the target cost for each product? (Round intermediate calculations and final answers to 2 decimal places.)

Target cost/unit

Reference no: EM131845623

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