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Gordon Creatives manufactures three models of garden gates: basic, standard and deluxe. Information for the products are as follows: Basic Standard Deluxe Direct material $30.00
Gordon Creatives manufactures three models of garden gates: basic, standard and deluxe. Information for the products are as follows: Basic Standard Deluxe Direct material $30.00 $50.00 $ 90.00 Direct labor 20.00 40.00 100.00 Machine hours 0.5 1.0 2.0 Sales price $125 $300 $500 Production volume 64,000 12,000 3,000 After some recent instances where results were not what he expected, Controller Carrie Barr wonders whether the company's product costs are accurate. She wants to explore whether activity- based accounting will improve product costing information. Currently the company expects to incur $3,000,000 in manufacturing overhead, which the company will apply to products using machine hours. The company expects to work 60,000 machine hours this year. As a starting point, Carrie examined company operations and discovered four activities account for the majority of operations: assembly, fabrication, quality control, setups and organization sustaining. The table below shows how manufacturing overhead costs are distributed across those activities. Assembly Fabrication Quality Control Setups Total cost $645,000 $570,000 $525,000 $775,00C pool Activity tA $32.25/DLH Rate 11.40/MH $210.00/inspection $50.00/set Carrie determined the activity drivers for the four activities and how those activities were consumed by the three products, as shown below. Quality Assembly Fabrication Control Setups 5,000 32,000 500 8,500 Basic 1,000 12,000 800 3,000 Standard 1,200 14,000 4,000 Deluxe 6,000 2,500 20,000 50,000 15,500 TotalCalculate the total unit cost for each of the three products under activity-based costing. ROUND YOUR ANSWERS TO 2 DECIMAL PLACES. DO NOT INCLUDE A $ IN YOUR ANSWERS. Basic: $ per unit Standard: $ per unit Deluxe: $ per unit
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