Question

Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates:

  

Activity Cost Pool	Activity Rates
Labor-related	$	5.00	per direct labor-hour
Machine-related	$	6.00	per machine-hour
Machine setups	$	40.00	per setup
Production orders	$	100.00	per order
Shipments	$	120.00	per shipment
General factory	$	6.00	per direct labor-hour

  

Cost and activity data have been supplied for the following products:

  

	J78		B52
Direct materials cost per unit	$	6.00	$	26.00
Direct labor cost per unit	$	5.00	$	6.00
Number of units produced per year		1,000		100

	Total Expected Activity
	J78		B52
Direct labor-hours	1,300		40
Machine-hours	2,200		30
Machine setups	5		2
Production orders	7		2
Shipments	6		2

Required:

Compute the unit product cost of each product listed above. (Round your answers to 2 decimal places.)

Answer 1

	J78	B52
Direct materials	$ 6.00	$    26.00
Direct labor	$ 5.00	$       6.00
Overheads	$ 29.12	$    11.40
Unit product cost $	$ 40.12	$    43.40

Activity Cost Pool	Activity Rates	J78		B52
		Activity	Cost	Activity	Cost
Labor related	$ 5.00	1300	$   6,500.00	40	$     200.00
Machine related	$ 6.00	2200	$ 13,200.00	30	$     180.00
Machine setups	$ 40.00	5	$       200.00	2	$       80.00
Production orders	$           100.00	7	$       700.00	2	$     200.00
Shipments	$           120.00	6	$       720.00	2	$     240.00
General factory	$ 6.00	1300	$   7,800.00	40	$     240.00
Total cost			$ 29,120.00		$ 1,140.00
Number of units produced			1000		100
Overhead per unit			$         29.12		$       11.40