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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 $21.15 per unit, while product B has been assigned $10.74 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 $ 183,000 90,000 62,000 Cost Drivers Setup hours Pounds of materials Kilowatt-hours Activity Driver Consumption 3,000 18,000 31,000 The following cost information pertains to the production of A and B, just two of Hakara's many products: A B Number of units produced 5,000 10,000 Direct materials cost $ 33,000 $ 25,000 Direct labor cost $ 28,000 Number of setup hours 100 1,000 $ 38,000 100 1,000 2,000 2,000 Pounds of materials used Kilowatt-hours 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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