Exercise 5-28 Activity-Based Costing [LO 5-2, 5-3]

Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $27.80 per unit, while product B has been assigned $13.23 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information:

Cost Pools	Activity Costs			Cost Drivers	Activity Driver Consumption
Machine setup	$	360,000		Setup hours		4,000
Materials handling		85,000		Pounds of materials		17,000
Electric power		50,000		Kilowatt-hours		25,000

The following cost information pertains to the production of A and B, just two of Hakara's many products:

	A			B
Number of units produced		4,000			10,000
Direct materials cost	$	39,000		$	38,000
Direct labor cost	$	22,000		$	27,000
Number of setup hours		100			200
Pounds of materials used		2,000			2,000
Kilowatt-hours		2,000			4,000

Required:

1. Use activity-based costing to determine a unit cost for each product. (Round your final answers to 2 decimal places.)

Product A:

Product B: