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Lately Ivanhoe Noodles, a regional factory that manufactures various kinds of pasta, has been delighted to experience growth in what has been a challenging economic
Lately Ivanhoe Noodles, a regional factory that manufactures various kinds of pasta, has been delighted to experience growth in what has been a challenging economic time for others. It has recently added penne pasta to its current offering of angel hair pasta. As part of its continued efforts to improve its internal processes, management has asked Donald, its accountant, to assist with some analysis. Currently Ivanhoe Noodles utilizes a traditional costing system. but it would like to explore the use of Activity-Based Costing (ABC) since it has expanded its offerings. Donald has identified that the company has the following key activities: Pertinent cost information related to their pasta offerings follows: Under their traditional costing system, Manufacturing Overhead (MOH) is currently assigned to products based on 86% of direct labor costs. Management is very interested to learn whether a switch to ABC will produce more accurate results, and would like to have support to back up their decision. Donald would like to be able to present management with a solid recommendation in the very near future. With this in mind, please complete the following questions. What is the cost per unit for each of the identified key activities that would be used under the proposed ABC ? (Round final answer to 2 decimal places, e.g. 12.25.)
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