Unit-Based Versus Activity-Based Costing

Fisico Company produces exercise bikes. One of its plants produces two versions: a standard model and a deluxe model. The deluxe model has a wider and sturdier base and a variety of electronic gadgets to help the exerciser monitor heartbeat, calories burned, distance traveled, etc. At the beginning of the year, the following data were prepared for this plant:

		Standard Model		Deluxe Model
Expected quantity		30,000		15,000
Selling price		$370		$700
Prime costs		$4.5	million	$5.25	million
Machine hours		37,500		37,500
Direct labor hours		75,000		75,000
Engineering support (hours)		13,500		31,500
Receiving (orders processed)		3,000		4,500
Materials handling (number of moves)		15,000		45,000
Purchasing (number of requisitions)		750		1,500
Maintenance (hours used)		6,000		24,000
Paying suppliers (invoices processed)		3,750		3,750
Setting up batches (number of setups)		60		540

Additionally, the following overhead activity costs are reported:

Maintenance		$600,000
Engineering support		900,000
Materials handling		1,200,000
Setups		750,000
Purchasing		450,000
Receiving		300,000
Paying suppliers		300,000
		$4,500,000

Required:

1. Calculate the cost per unit for each product using direct labor hours to assign all overhead costs.

	Unit cost
Standard	$___
Deluxe	$___

2. Calculate activity rates.

	Activity Rates
Maintenance	$___	per hour used
Engineering support	$___	per hour
Materials handling	$___	per move
Setups	$___	per setup
Purchasing	$___	per requisition
Receiving	$___	per order
Paying suppliers	$___	per invoice

Determine the cost per unit. If required, round your final answers to the nearest cent.

	Cost
Standard	$____ per unit
Deluxe	$____ per unit