ADA has the following budget information for the year: Cost of direct materials Cost of direct labor Number of direct labor hours Number of capsules Diomycin $ 202,000 247,000 7,170 970,000 Homycin $262,000 231,000 6,770 497,000 Addolin $255,000 260,000 1,970 297,000 ADA has identified the following activities and cost drivers and has assigned them a total overhead cost of $198,500. Activity Machine setup Plant management Supervision of direct labor Quality inspection Order expediting Total overhead Cost Driver Setup hours Number of Workers Direct labor hours Inspection hours Customers served Budgeted Overhead Cost $ 15,700 35,700 45,700 50, 100 51,300 $198,500 Budgeted Cost Driver Volume 1,570 1,170 15,700 1,035 630 Takedo selected the cost drivers with the following justifications: SETUP HOURS: The cost driver of setup hours is used because the same product takes about the same amount of setup time regardless of size of batch. For different products, however, the setup time varies. NUMBER OF WORKERS: Plant management includes plant maintenance and corresponding managerial duties that make production possible. This activity depends on the number of workers. The more workers involved, the higher the cost. DIRECT LABOR HOURS: Supervisors spend their time supervising production. The amount of time they spend on each product is proportional to the direct labor hours worked. INSPECTION HOURS: Inspection involves testing a number of units in a batch. The time varies for different products but is the same for all similar products. NUMBER OF CUSTOMERS SERVED: The need to expedite production increases as the number of customers served by the company increases. Thus, the number of customers served by ADA is a good measure of expediting production orders. Takedo gathered the following information about the cost driver volume for each product: Setup hours Number of workers Direct labor hours Inspection hours Customers served Diomycin 185 185 7,170 135 42 Homycin 585 385 6,770 185 97 Addolin 785 585 1,970 685 485 Required: 1. Use the firm's current costing system to calculate the unit cost of each product. 2. Use the activity-based cost system to calculate the unit cost of each product. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Use the firm's current costing system to calculate the unit cost of each product. (Round intermediate calculations to 2 decimal places. Round "Cost per capsule" to 2 decimal places.) $ $ Diomycin 202,000.00 247,000.00 $ $ Homycin 262,000.00 231,000.00 $ $ Addolin 255,000.00 260,000.00 Direct Materials Direct Labor Overhead Total Cost Packets produced Cost per capsule $ 970,000.00 $ 497,000.00 $ 297,000.00 Required: 1. Use the firm's current costing system to calculate the unit cost of each product. 2. Use the activity-based cost system to calculate the unit cost of each product. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Use the activity-based cost system to calculate the unit cost of each product. (Round intermediate calculations to 2 decimal places. Round "Cost per capsule" to 2 decimal places.) $ | $ Diomycin 202,000.00 247,000.00 $ $ Homycin 262,000.00 231,000.00 $ $ Addolin 255,000.00 260,000.00 Direct Materials Direct Labor Overhead Total Cost Packets produced Cost per capsule $ 970,000.00 $ 497,000.00 $ 297,000.00
