Cornerstone Exercise 15.2 (Algorithmic)

Value-Stream Costing Objective

During the week of June 12, Harrison Manufacturing produced and shipped 17,000 units of its aluminum wheels: 3,600 units of Model A and 13,400 units of Model B. The following costs were incurred:

MaterialsSalaries/

WagesMachiningOtherTotal CostOrder processing$19,400$19,400Production planning295,800295,800Purchasing22,50022,500Stamping$355,00035,500$36,600$18,200445,300Welding150,00042,00012,000246,000485,000Cladding11,00011,000Testing8,0008,000Packaging and shipping8,0008,000Invoicing13,00013,000Total $990,000$447,200$78,600$30,200$1,546,000Required:

1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost.

$ per unit

2. Calculate the unit cost for Models A and B.

Unit CostModel A$ Model B$

3. What if Model A is responsible for 40 percent of the materials cost? Calculate the unit materials cost for Models A and B.

Unit CostModel A$ Model B$

Calculate the total unit cost for Models A and B.

Unit CostModel A$ Model B$