Reference no: EM132500914

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

Manufacturing                              Activity Cost Driver                           Driver Rate

Materials handling                          Number of parts                              $0.6

Machinery                                Number of machine hours                        59

Assembly                               Number of parts                             3.25

Inspection                              Number of finished units                                   38

• Drilling has just completed 88 units of a component for a customer. Each unit required 108 parts and 3.40 machine hours. The prime cost is $1,380 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 88 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 $188 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $308 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.