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Question - 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
Automated machinery
$840 000
Machine hours
Finishing
$170 000
Labour hours
Packaging
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
Required - Under an activity-based product costing system, what is the cost per unit of Cheap?
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