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Example: Glide-Free, Inc. manufactures two models of patio swings, Deluxe (upholstered with a woven-vinyl material) and Standard (with stained-wood finish). The following data relate
Example: Glide-Free, Inc. manufactures two models of patio swings, Deluxe (upholstered with a woven-vinyl material) and Standard (with stained-wood finish). The following data relate to the company's production activities and costs: Manufacturing Activity Budgeted Activity Costs for Year Cost Driver Used as Allocation Base Cost Per Unit of Allocation Base Materials Handling $300,000 Number of parts $0.40 Cutting 1,500,000 Number of parts 2.00 Assembly 4,500,000 Number of parts 6.00 Upholstery 1,200,000 Direct labor hours 20.00 Wood finishing 3,000,000 Direct labor hours 15.00 Actual production data for the month of April is as follows: Direct Labor Hours Model # of Units Produced Direct Material Costs Total # of Parts Upholstery Wood Refin. Standard 8,000 $100,000 64,000 16,200 Deluxe 2,500 62,500 30,000 5,100 Required: 1. Compute for each model the total manufacturing costs and manufacturing cost per unit. 2. In addition, various upstream costs (for product design and research) have been identified and applied to the Standard model at $15 per unit and to the Deluxe model at $25 per unit. Also, downstream costs (for marketing, distribution, and customer service) of $120 and $180 have been applied to each unit of the Standard and Deluxe models, respectively. Compute the full product cost per unit of each model.
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