Activity Based Costing

IE Department Manufacturing Makes two Products (A and B). The management decides to use the following Activities and Cost Drivers. Activities Cost/year Cost Driver Consumption of Cost Driver per year Purchasing, Storage and material handling S 250,000 Raw material cost $ 1,000,000 Engineering and Product Design $ 300,000 Hours in design 5,000 hours Set up Costs $ 100,000 Number of setups 1,000 setups $ 300,000 M/c. Depreciation and maintenance Machine hours 100.000 hours $ 250,000 Factory depreciation taxes insurance and utilities Machine hours 100,000 hours Other manufacturingS 200,000 overhead costs Machine hours 100,000 hours Total S 1,400,000 The requirements of two of the products (A and B) are as follows: Product A (per 15,000 units) Product B (per 10,000 units) 50 hours Direct Labor Hours Raw-Material cost Hours in Design Set ups Machine hours 24 hours $ 36,000 25 S 50,000 30 24