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MC Bristol Electronics produces wide range of... Bristol Electronics produces wide range of electronic products. The company has a labour based costing system that was

MC Bristol Electronics produces wide range of...

Bristol Electronics produces wide range of electronic products. The company has a labour based costing system that was introduced in the 1970s and is now considering implementing an activity based costing (ABC) system. Managers are concerned about how they should compare the ABC data with the existing costing system. Selected data from the management accounts for the year ending 31st December 2017.

Cost data
Total manufacturing overhead for year 1,000,000
Total hours for year 60,000 hours
Direct labour cost per hour 10

Data for 3 products only

Product A Product B Product C
Annual production 1,000 units 2,000 units 5,000 units
Material cost per unit 5.00 6.00 7.00
Direct labour hours per unit 1.00 1.50 0.50

ABC data for all products
Cost pool/driver Annual costs (s) Annual volume
Number of set-ups 200,000 1,000
Inspection time (hours) 500,000 3,000
Machine maintenance (hours) 100,000 5,000
Number of purchases 100,000 500
Number of shipments 100,000 500
1,000,000

ABC data 3 products Product A Product B Product C
Number of set-ups 20 180 30
Inspection time (hours) 20 50 300
Machine maintenance (hours) 30 40 20
Number of purchases 3 4 5
Number of shipments 3 4 6

Determine the Total Unit cost for Product C using the activity based date

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