Question
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.
Activity | Cost | Cost Driver | ||||
Material handling | $ | 283,000 | Number of parts | |||
Material insertion | 2,750,000 | Number of parts | ||||
Automated machinery | 851,000 | Machine hours | ||||
Finishing | 207,000 | Direct labor hours | ||||
Packaging | 207,000 | Orders shipped | ||||
Total | $ | 4,298,000 | ||||
The following information pertains to the three product lines for next year:
Economy | Standard | Deluxe | |||||||||
Units to be produced | 11,300 | 5,200 | 2,800 | ||||||||
Orders to be shipped | 1,320 | 430 | 235 | ||||||||
Number of parts per unit | 5 | 10 | 20 | ||||||||
Machine hours per unit | 1 | 2 | 5 | ||||||||
Labor hours per unit | 3 | 3 | 3 | ||||||||
Under Barnetts activity-based costing system, what is the per-unit overhead cost of Economy? (Do not round your intermediate calculations and round your final answer to 2 decimal places.)
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