Reference no: EM132500651

Drilling Company uses activity-based costing and provides this information:

Manufacturing Activity Cost Driver Driver Rate

Materials handling Number of parts $ 0.7

Machinery Number of machine hours 57

Assembly Number of parts 3.15

Inspection Number of finished units 36

• Drilling has just completed 86 units of a component for a customer. Each unit required 106 parts and 3.30 machine hours. The prime cost is $1,360 per finished unit. All other manufacturing costs are classified as manufacturing overhead.

Required:

Question 1. Compute the total manufacturing costs and the unit costs of the 86 units just completed using ABC costing.

Question 2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $186 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $306 per unit. Compute the full product cost per unit, including upstream, manufacturing, and downstream activities. Also compute the relative proportion of each main cost category.