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Find 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: EM132552993

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