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Determine what is the cost per unit of cheap

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Hi Tech Products manufactures three (3) types of CD players: Cheap, Econo and Deluxe. Hi Tech uses an activity-based product costing system. The company has identified five (5) activities. Each activity, its cost and related activity driver are identified below:

Activity                                 Activity Cost                         Activity Driver

Material handling                      $225 000                  Number of parts

Material insertion                   $2 475 000                 Number of parts

Automated machinery               $840 000                Machine hours

Finishing                                $170 000                   Labour hours

Packaging                                  $170 000            Orders shipped

Total manufacturing cost                        $3 880 000

The following information pertains to each product line of CD players:

                                            Cheap           Econo                 Deluxe

Units to be produced            10 000      5000                 2000

Orders to be shipped              1000         500                  200

Number of parts per unit         10               15                 25

Machine hours per unit               1                   3                  5

Labour hours per unit                   2                  2                     2

Question 1: Under an activity-based product costing system, what is the cost per unit of Cheap?

Reference no: EM132556645

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