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Montana Company manufactures three products in its plant: X, Y, and Z. Unit costs and machine hour usage for the three products are Direct materials
Montana Company manufactures three products in its plant: X, Y, and Z. Unit costs and machine hour usage for the three products are Direct materials Direct labor Machine hours 38 32 $44 17 $11 $15 4 Budgeted production (units) 25,000 33,000 14,000 Assume that Montana uses a traditional method of overhead allocation, based on direct labor cost Budgeted overhead for the period is $4,091,800 Compute the unit cost of production to the nearest cent for products X,Y, and Z. b) Now assume that Montana uses an ABC system with three cost drivers: machine hours, setups, and number of parts. Product X requires two setups per period, and requires five distinct parts. Product Y requires four setups, and eight parts. Product Z requires ten setups and fifteen parts. Cost pools Setups Machine hours Parts 528,300 2,797,400 766,100 4,091,800 Compute the unit cost of production for products X, Y, and Z using the ABC systenm
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