Calculate the cost per unit for products, Cost Accounting

Chemical Recovery Company uses common machinery to manufacture two products.  Each year, the company has a total of four productions runs, which is two production runs for each product. Each run requires similar setup effort. Setup cost totals $40,000 per year and is included in manufacturing overhead. Total overhead for the company is $160,000 annually, and total expected direct labor hours equal 14,000.

The following information is available for products A and B.

                                                                Product A            Product B

Units produced                                10,000                   2,000

Direct material cost per unit               $16                         $16

Direct labor cost per unit                    $20                         $20

Direct labor hours per unit                   1                              1

Required: Calculate the cost per unit for each product, using activity-based costing. Round allocation rates and your final answers to the nearest penny. Show calculations to support your answers.



Posted Date: 3/20/2013 4:09:42 AM | Location : United States

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