Reference no: EM132463293

Your company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system product A has been assigned overhead of $10.80 per unit while product B has been assigned $3.60 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information:

Cost Pools                                 Activity Costs                 Cost Driver                Driver Consumption

Machine setup                        $360,000                     Setup hours                      4,000

Materials handling                     100,000                      Pounds of materials            20,000

Electric power                            40,000                       Kilowatt-hours                 40,000

The following cost information pertains to the production of A and B, just two of its many products:

                                                        A                     B

Number of units produced                4,000            20,000

Direct materials cost                      $42,000         $54,000

Direct labor cost                           $24,000         $40,000

Number of setup hours                         400               200

Pounds of materials used                    1,000            3,000

Kilowatt-hours                                  2,000            4,000

Required:

Question 1: Use activity-based costing to determine a unit cost for each product. (Round your answers to 2 decimal places.)