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Exercise 5-28 (Algo) 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
Exercise 5-28 (Algo) 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 $28.26 per unit, while product B has been assigned $11.09 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 Machine setup Materials handling Electric power Activity Costs $ 128,000 84,000 33,000 Cost Drivers Setup hours Pounds of materials Kilowatt-hours Activity Driver Consumption 2,000 14,000 33,000 The following cost information pertains to the production of A and B, just two of Hakara's many products: Number of units produced Direct materials cost Direct labor cost Number of setup hours Pounds of materials used Kilowatt-hours Required: A 4,000 B $ 36,000 10,000 $ 25,000 $ 34,000 $ 36,000 100 1,000 200 1,000 2,000 4,000 1. Use activity-based costing to determine a unit cost for each product. (Round your final answers to 2 decimal places.) Cost per Unit Product A Product B
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