Value-Stream Average Costing, ABC Costs as Benchmarks

A value stream has three activities and two products. The units produced and shipped per week are 50 of the deluxe model (Model A) and 150 of the basic model (Model B). The resource consumption patterns are shown as follows:

	Model A		Model B		Costs of Value- Stream Activities
Cell manufacturing	2,390	min.	7,170	min.	$	95,600
Engineering	50	hrs.	180	hrs.		18,860
Testing	105	hrs.	294	hrs.		29,925
Total					$	144,385

Required:

1. Calculate the ABC product cost for Models A and B. If required, round your answers to the nearest cent.

	Product Cost Per Unit
Model A	$ per unit
Model B	$ per unit

2a. Calculate the value-stream average product cost. If required, round your answer to the nearest cent. $ per unit

2b. Assuming reasonable stability in the consumption patterns of the products and product mix, assess how well the products are grouped based on similarity.

(The two value-stream products are similar) or (The two value-stream products are not similar) or (Not enough information is given to answer)