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Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A
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 $35.29 per unit, while product B has been assigned $8.25 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: Activity Driver Cost Pools Machine setup Materials handling. Electric power Activity Costs Cost Drivers Setup hours $ 261,000 153,000 38,000 Pounds of materials Kilowatt-hours Consumption 3,000 17,000 38,000 The following cost information pertains to the production of A and B, just two of Hakara's many products: Number of units produced A 4,000 B Direct materials cost $ 37,000 20,000 $ 27,000 Direct labor cost $ 41,000 $ 40,000 Number of setup hours 200 200 Pounds of materials used Kilowatt-hours 1,000 4,000 2,000 2,000 Required: 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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