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Brown Inc. manufactures and distributes two types of household items. The items, Mops and Dusters, are manufactured on a common assembly line by the same
Brown Inc. manufactures and distributes two types of household items. The items, Mops and Dusters, are manufactured on a common assembly line by the same direct labourers. Different direct materials are used in each type, and the machinery is retooled for each product. Until now, manufacturing overhead costs have been allocated on the basis of direct labour-hours using a plantwide rate. However, the production manager has been reading about ABC and wishes to institute it for Brown's production operations. To that end, she has assembled the following information regarding production activities and manufacturing overhead costs for the month of September Activity Usage Cost Driver Activity Cost Pool Materials handling (activity base) Number of Allocation Rate Mops Dusters 1,100 parts Machining Assembly Inspection Direct materials Direct labour arts Machine-hours Units started Units tested S 1.00 per part $10.00 per machine-hour $ 1.40 per unit $ 2.00 per unit 700 parts 165 machine-hours 700 units 600 units 110 machine-hours 550 units 55 units $2,750 $6,600 $1,400 $6,600 Each product consumed 330 direct labour-hours Required 1. Using ABC, determine the total manufacturing cost and cost per unit for each of the two product lines for September, assuming that all units were started and completed in September. (Round "Cost per unit" answers to 2 decimal places.) Dusters Total manufacturing cost Cost per unit 2. Using the plantwide rate to allocate manufacturing overhead, determine the total manufacturing cost per unit for each of the two product lines for September, assuming that all units were started and completed in September. (Round "Cost per unit" answers to 2 decimal places.) Dusters Total manufacturing cost Cost per unit
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