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Boscoe Ltd manufactures component parts. One product, DN25, has annual sales of 42,000 units. Bosco Ltd sells DN25 for $43.6 per unit. It has two
Boscoe Ltd manufactures component parts. One product, DN25, has annual sales of 42,000 units. Bosco Ltd sells DN25 for $43.6 per unit. It has two direct cost categories (direct materials, direct manufacturing labour) and two activity-based categories (engineering and testing). All R&D and design costs are included in the engineering cost category. There are no marketing, distribution or customer-service costs. The cost driver for engineering is engineer-hours and the cost driver for testing is test-hours. Testing costs are variable costs. Engineering costs are fixed costs based on engineering capacity. Information on annual costs includes the following: Direct materials: $16.7 per unit Direct manufacturing labour: $16.7 per direct manufacturing labour-hour Engineering $14 per engineer-hour (based on capacity of 34,000 engineering-hours) Testing: $14 per test-hour Each unit of DN25 requires 0.3 direct manufacturing labour-hours to produce and 0.3 test-hours to test, Calculate and enter the amount of full cost per unit of DN25 if Boscoe Ltd produces 42,000 units
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