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Hayes Company manufactures two products, A and B. Actual year-end data regarding the two products follow: Product Direct Labor Hours per Unit Annual Production Total
Hayes Company manufactures two products, A and B. Actual year-end data regarding the two products follow:
Product | Direct Labor Hours per Unit | Annual Production | Total Direct Labor Hours |
A | 2 | 5,000 units | 10,000 |
B | 1 | 40,000 units | 40,000 |
50,000 |
Additional information about Hayes Company follows:
- Product A required $100 in direct material per unit, and product B required $50.
- The direct labor rate was $30 per hour.
- Manufacturing overhead totaled $2,000,000.
The company uses activity-based costing to apply overhead cost to products. Three activity centers have been identified as follows:
Events | Cost Driver | Traceable Costs | Total | Total Product A | Total Product B |
Machine Setups | # of Setups | $600,000 | 200 | 50 | 150 |
Special Processing | CPU Minutes | $400,000 | 10,000 | 10,000 | 0 |
General Factory | Direct Labor Hours | $1,000,000 | 50,000 | 10,000 | 40,000 |
$2,000,000 |
Calculate the cost per unit for each product using ABC. Also identify the per unit DM, DL, and MO for each product:
A | B | |
Direct Material/unit | ||
Direct Labor/unit | ||
Manufacturing Overhead/unit | ||
Total Unit Cost |
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