Question
Stag Limited is a large manufacturing company that has three production departments (processing, assembly and finishing). The following unit costs relate to the companys bestselling
Stag Limited is a large manufacturing company that has three production departments (processing, assembly and finishing). The following unit costs relate to the companys bestselling product, the Buck:
Direct Materials | 25 |
Direct Labour Hours | 0.4 hours per unit |
Direct Labour Cost | 18.00 per hour |
Machine Hours | 0.75 hours per unit |
Machine Hour Cost | 32 per hour |
The following production information has been obtained for the production of 125 units of Buck:
Activity cost information |
|
Number of production set-ups | 6 |
Assembly production run time (hours) | 4 |
Number of production inspections | 12 |
The following cost driver rates are applied to the relevant activities above:
Cost of activities |
|
A production set-up | 160 |
An hour on the assembly production line | 50 |
A production inspection | 45 |
Stag Limited requires a 20% profit margin on all sales.
Calculate the unit selling price of the Buck using the information above.
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