Baden-Mbel GmbH manufactures a variety of prestige boardroom chairs. Its job-costing system was designed using an activity-based

Baden-Möbel GmbH manufactures a variety of prestige boardroom chairs. Its job-costing system was designed using an activity-based approach. There are two direct-cost categories (direct materials and direct manufacturing labour) and three indirect-cost pools. These three cost pools represent three activity areas at the plant:

Two styles of chairs were produced in March, the executive chair and the chairman chair. Their quantities, direct material costs and other data for March 2018 are as follows: 

The direct manufacturing labour rate is €2 per hour. Assume no opening or closing stock.

Required

1. Calculate the March 2018 total manufacturing costs and unit costs of the executive chair and the chairman chair. 

2. Suppose that the upstream activities to manufacturing (R&D and design) and the downstream activities (marketing, distribution and customer service) were analysed. The unit costs in 2018 were budgeted to be as follows:

Calculate the full product costs per unit of each line of chairs. (Full product costs are the sum of the costs in all business function areas.)

Transcribed Image Text:

Manufacturing activity area Budgeted costs for 2018 Cost driver used as Cost-allocation allocation base rate Materials handling Cutting Assembly 200 000 Parts €0.25 2 160 000 Parts 2.50 Direct manufacturing labour-hours 2 000 000 25.00