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Chewie's Rug Company has identified the following overhead costs and cost drivers for next year: Overhead Item Expected Costs Cost Driver Maximum Quantity Setup costs
Chewie's Rug Company has identified the following overhead costs and cost drivers for next year: Overhead Item Expected Costs Cost Driver Maximum Quantity Setup costs $1,166,400 Number of setups 4,800 Ordering costs 540,000 Number of orders 40,000 Maintenance 1,856,000 Machine-hours 64,000 Power 180,000 Kilowatt-hours 400,000 The following are two of the jobs completed during the year: Job 201 Job 202 Direct materials $18,000 $20,000 Direct labor $24,000 15,000 Units completed 750 600 Direct labor-hours 180 220 Number of setups 12 15 Number of orders 16 30 Machine-hours 360 300 Kilowatt-hours 180 240 Required: a) Determine the total unit cost for each job using the four cost drivers. (Round amounts to 2 decimal places, show your calculations.) b) Given the unit costs calculated in part a.), what sort of information would management have, and how could they use this information? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)
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