Reference no: EM132465359

Drilling Company uses activity-based costing and provides this information:

Manufacturing Activity                    Cost Driver                    Driver Rate

Materials handling                        Number of parts                    $0.4

Machinery                                 Number of machine hours               61

Assembly                                   Number of parts                        3.35

Inspection                             Number of finished units                   40

• Drilling has just completed 90 units of a component for a customer. Each unit required 110 parts and 3.50 machine hours. The prime cost is $1,400 per finished unit. All other manufacturing costs are classified as manufacturing overhead.

Required:

Question 1. Compute the total manufacturing costs and the unit costs of the 90 units just completed using ABC costing.

Question 2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $190 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $310 per unit. Compute the full product cost per unit, including upstream, manufacturing, and downstream activities. Also compute the relative proportion of each main cost category.