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Green Furniture (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for

Green Furniture (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and labour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour-hours as the allocation base. GFs accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the system by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter.

Activity Cost Pool Activity Base Activity Rate Activity Usage
Desks Cabinets
Parts receipts Number of parts $ 2.00 per part 1,800 parts 1,250 parts
Machining Machine-hours $ 12.00 per machine-hour 185 machine-hours 270 machine-hours
Assembly Units produced $ 1.80 per unit 900 units 1,250 units
Quality control Units tested $ 3.00 per unit 90 units 1,150 units
Direct materials $ 4,500 $ 2,500
Direct labour $ 10,800 $ 10,800

Each product consumed 540 direct labour-hours.

Required:

1. Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based costing to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.)

2. Redo the above using direct labour-hours as the allocation base. (Round "Cost per unit" answers to 2 decimal places.)

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