Reference no: EM132203745
KY makes several products including Product W. KY is considering adopting an activity-based approach for setting its budget. The company's production activities, budgeted activity costs and cost drivers for next year are given below:
Activity $ Cost driver Cost driver
Quantity
Set-up cost 200,000 No. of set-ups 800
Inspection /quality control 120,000 No. of quality test 400
Stores receiving 252,000 No. of purchase requisitions 1,800
Machines are reset after each batch. Quality tests are carried out after every second batch.
The budgeted data for Product W for next year are:
Direct materials $2.50 per unit
Direct labour 0.3 hrs per unit @ $18 per hour
Batch size 150 units
Number of purchase requisitions 80
Budget production 15,000 units
Required:
Calculate, using activity-based costing, the budgeted total production cost per unit for Product W.