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8-5. ABC Corporation produces 50,000 units of product X and 5,000 units of product Y at a direct materials cost of $3.00 per unit. Product
8-5. ABC Corporation produces 50,000 units of product X and 5,000 units of product Y at a direct materials cost of $3.00 per unit. Product X requires 3 minutes and product Y30 minutes direct labor per unit (at $20.00 per hour). Other costs (tooling, setup, and equipment depreciation and maintenance) for this period amount to $60,000. (a) If these "other costs" are allocated on the basis of direct labor hours, what is the apparent unit cost of each product? (b) Production of product X is highly automated to reduce direct labor cost; it is responsible for $55,000 of this "other cost," and product Y only $5,000. Using activitybased costing, what do the unit costs now become? (c) What difference might this make in ABC Corporation's actions
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