Simon Corporation manufactures two models of watches. The children's watch displays cartoon characters and has simple features designed for kids. The adult watch has sophisticated features such as dual time zones and an attached calculator. Simon's product design team has worked with a cost accountant to prepare a budget for the two products for the next fiscal year as follows. Direct Cost Direct materials Direct labor Category Materials handling Machine setups Product testing Facility depreciation Total Required Children's Model (C) $6 per unit $40/hour X 0.2 hour production time per unit Estimated Cost $366,000 180,000 28,000 360,000 $934,000 Cost Driver Number of parts Number of setups Number of units tested $40/hour X 0.6 hour production time per unit Adult Model (A) $30 per unit Number of machine hours Use of Cost Driver C: 700,000 A: 520,000 C: 50 A: 40 C: 1,000 A: 400 C: 3,200 A: 4,000 Children's watches have 35 parts, and Adult watches have 65 parts. The budget calls for producing 20,000 Children's watches and 8,000 Adult watches. Simon tests 5 percent of its products for quality assurance. It sells all its products at market prices. a. Compute the cost per unit for each product assuming overhead is allocated based upon machine hours. b. Compute the cost per unit for each product assuming overhead is allocated using activity based costing.

Simon corporation manufactures two models of watches. The children's watch displays cartoon characters and has simple features designed for kids. The adult watch has sophisticated features such as dual time zones and an attached calculator. Simon's product design team has worked with a. cost accountant to prepare a budget for the two products for the next fiscal vear as follows. Children's watches have 35 parts, and Adult watches have 65 parts. The budget calls for producing 20,000 Children's watches and 8,000 Adult watches. Simon tests 5 percent of its products for quality assurance. It sells all its products at market prices: Required a. Compute the cost per unit for each product assuming overhead is allocated based upon machine hours. b. Compute the cost per unit for each product assuming overhead is allocated using activity based costing