The Federation Company has analysed various activities in its value chain of business functions that extend from research and development through customer service. One of its products, a special diesel engine, has a manufacturing cost of $13,000 per unit. In addition, the following applicable costs have been identified with the engine: research and development $800, product design $1,200, marketing $5,000, distribution $900 and customer services $1,600.

Firstly, calculate the full product cost per unit and secondly, provide a general description of how the $13,000 manufacturing cost would be built up under activity-based costingd various activities in its value chain of business functions that extend from research and development through customer service. One of its products, a special diesel engine, has a manufacturing cost of $13,000 per unit. In addition, the following applicable costs have been identified with the engine: research and development $800, product design $1,200, marketing $5,000, distribution $900 and customer services $1,600. Firstly, calculate the full product cost per unit and secondly, provide a general description of how the $13,000 manufacturing cost would be built up under activity-based costing