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.
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