Hakara Company has been using direct labor costs as the basis for assigning overhead to its...
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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 has been assigned overhead of $10.80 per unit, while product B has been assigned $3.60 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 Machine setup Materials handling Electric power $ 360,000 100,000 40,000 Cost Drivers. Setup hours Pounds of materials Kilowatt-hours Activity Driver Consumption 4,000 20,000 40,000 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: 4,000 $ 42,000 20,000 $ 54,000 $ 24,000 $ 40,000 400 1,000 200 3,000 2,000 4,000 1. Use activity-based costing to determine a unit cost for each product. (Round your answers to 2 decimal places.) Cost per Unit Product A Product B 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 $10.80 per unit, while product B has been assigned $3.60 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 Machine setup Materials handling Electric power $ 360,000 100,000 40,000 Cost Drivers. Setup hours Pounds of materials Kilowatt-hours Activity Driver Consumption 4,000 20,000 40,000 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: 4,000 $ 42,000 20,000 $ 54,000 $ 24,000 $ 40,000 400 1,000 200 3,000 2,000 4,000 1. Use activity-based costing to determine a unit cost for each product. (Round your answers to 2 decimal places.) Cost per Unit Product A Product B
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