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Computing indirect manufacturing costs per unit
The following information is provided for the Orbit Antenna, Corp., which manufactures two products: Lo-Gain antennas, and Hi-Gain antennas for use in remote areas.
Activity
Cost
Cost Driver
Setup
$ 57,000
Number of setups
Machine maintenance
27,000
Machine hours
Total indirect manufacturing costs
$ 84,000
Lo-Gain
Hi-Gain
Total
Direct labor hours
1,400
3,600
5,000
30
60
Number of machine hours
1,800
1,200
3,000
Orbit plans to produce 75 Lo-Gain antennas and 150 Hi-Gain antennas.
Requirements
1. Compute the ABC indirect manufacturing cost per unit for each product.
2. Compute the indirect manufacturing cost per unit using direct labor hours from the single-allocation-base system.
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