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18 Maximum Inc. manufactures seals that are used in outdrive motors for boats. The seals, classified as either Seal-A or Seal-B, are manufactured on a
18 Maximum Inc. manufactures seals that are used in outdrive motors for boats. The seals, classified as either Seal-A or Seal-B, are manufactured on a common assembly line. Although different direct materials are used and the machinery is re-tooled for each Activity used in: product, the direct laborers are the same for Activity Cost Driver Allocation Rate Seal-A Seal-B each product line Material handling Number of parts $1.40 per part 2,600 1,620 The plant-wide rate for allocating Machining Machine hrs. $21.00 per hr 266 380 manufacturing overhead to its products is no Assembly Units began $2.02 per unit 1,400 1,860 Inspection Number tested $2.60 per unit 160 1,660 longer acceptable. The production manager has heard about activity-based costing and Direct costs: has assembled some information for use in Labor $15,200 $15,200 changing the cost system into a cost driver Materials $7,340 $5,120 concept With the help of the accounting department, the manager has been able to establish the following relationships between production costs and some of the indirect manufacturing activities for August, along with the production data for the two product lines as presented above. Required Determine the total production cost of each of the two product lines for August and the cost per unit, assuming all units started were completed. Round all figures to 2 decimal places
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