Question

Value-Stream Costing Objective During the week of June 12, Harrison Manufacturing produced and shipped 16,400 units of its aluminum wheels: 3,600 units of Model A and 12,800 units of Model B. The following costs were incurred: Materials Salaries/ Wages Machining Other Total Cost Order processing $19,400 $19,400 Production planning 304,800 304,800 Purchasing 23,400 23,400 Stamping $380,000 38,000 $37,200 $19,200 474,400 Welding 160,000 20,000 16,000 12,000 208,000 Cladding 65,000 65,000 Testing 10,000 10,000 Packaging and shipping 10,000 10,000 Invoicing 14,200 14,200 Total $605,000 $439,800 $53,200 $31,200 $1,129,200 Required: Note: Round ALL interim calculations to two decimal places. Uses these values in subsequent computations.

1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost.

2. Calculate the unit cost for Models A and B. Unit Cost

Model A $

Model B $

3. What if Model A is responsible for 40 percent of the materials cost? Calculate the unit materials cost for Models A and B.

Unit Cost Model A $

Model B $

Calculate the total unit cost for Models A and B.

Unit Cost Model A $

Model B $

Answer 1

1		Material	wages	Machining	Other	Total
	Order pRocessing		19400			19400
	Production Planning		304800			304800
	Purchasing		23400			23400
	Stamping	380000	38000	37200	19200	474400
	Welding	160000	20000	16000	12000	208000
	Clading	65000				65000
	Testing		10000			10000
	Packaging shipping		10000			10000
	Invoicing		14200			14200
	Total Cost	605000	439800	53200	31200	1129200
	Total Units					16400
	Unit Cost (Total Cost/Units)					68.85

2.

		Model A	Model B	Total
Units		3600	12800	16400
Total Cost (1129200/16400*3600)		2,47,873.17	8,81,326.83	1129200
(1129200/16400*12800)
Unit Cost (Cost/Units)		68.85	68.85

3	Unit Material Cost		Model A	Model B
	Weightage		40%	60%
	Material Cost (605000*weight)		242000	363000
	Unit Material Cost (Cost/Unit)		67.22	28.36

3.

		Model A	Model B	Total
Material Cost (From part above)		242000	363000	605000
Other Cost
(1129200-605000) In Unit ratio		115068	409132	524200
Total Cost		357068	772132	1129200
Units		3600	12800	16400
Unit Cost		99	60