Question
R4 Friends Co. (R4F) uses activity-based costing in their manufacturing process. The company produces two products, ABC and XYZ. R4F has provided their costing department
R4 Friends Co. (R4F) uses activity-based costing in their manufacturing process. The company produces two products, ABC and XYZ. R4F has provided their costing department the following information from this years budget relating to the production of these two products:
|
| ABC |
| XYZ |
| Units to be produced | 40,000 |
| 60,000 |
| Machine-hours expected | 1,000 |
| 2,000 |
| Direct labor-hours expected | 2,000 |
| 3,000 |
| Materials handling (number of moves) | 600 |
| 700 |
| Machine setups (number of setups) | 200 |
| 150 |
The following costs are expected to be incurred throughout the year, and are related to the cost drivers being measured:
| Direct Labor Wages | $500,000 |
| Materials Handling | 40,000 |
| Labor-related overhead | 420,000 |
| Machine setups | 70,000 |
NOTE: Round all per-unit costs to nearest cent.
What is the total expected overhead per unit allocated to product XYZ?
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