During the week of June 12, Leonard Manufacturing produced and shipped 7,500 units CORNERSTONE 15-2 of its aluminum wheels: 1,500 units of Model A and 6,000 units of Model B. The following costs were incurred:

Required:
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, and comment on its accuracy.
2. Calculate the unit cost for Models A and B, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation.
3. What if Model A is responsible for 40 percent of the materials cost? Show how the unit cost would be adjusted for this condition.LO1 

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Order processing Production planning Materials Salaries/ Wages Machining Other $ 36,000 Total Cost $ 36,000 72,000 72,000 Purchasing Stamping Welding Cladding Testing 54,000 54,000 $ 750,000 75,000 $ 72,000 $36,000 933,000 300,000 84,000 84,000 24,000 492,000 150,000 150,000 21,000 21,000 Packaging and 18,000 18,000 shipping Invoicing Totals 24,000 24,000 $1,200,000 $384,000 $156,000 $60,000 $1,800,000