Question
MedTech Inc. manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials
MedTech Inc. manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning four manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $15 per hour and that there were no beginning inventories. The following information was available for 2019, based on an expected production level of 542,857 units for the year:
Activity Cost Driver | Budgeted Costs for 2019 | Cost Driver Used as Allocation Base | Cost Allocation Rate | ||||
Materials handling | $ | 4,500,000 | Number of parts used | $ | 4.00 | per part | |
Milling and grinding | 8,100,000 | Number of machine hours | 15.00 | per hour | |||
Assembly and inspection | 5,800,000 | Direct labor hours worked | 4.75 | per hour | |||
Testing | 1,900,000 | Number of units tested | 3.50 | per unit | |||
The following production, costs, and activities occurred during the month of August:
Units Produced/Tested | Direct Materials Costs | Number of Parts Used | Machine Hours | Direct Labor Hours |
59,000 | $3,600,000 | 270,000 | 94,000 | 170,000 |
Required:
a. Calculate the total manufacturing costs and the cost per unit produced and tested during the month of August for MedTech. (Round "Cost per unit" to 2 decimal places.)
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