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Value-Stream Costing Objective During the week of June 12, Harrison Manufacturing produced and shipped 16,000 units of its aluminum wheels: 3,600 units of Model
Value-Stream Costing Objective During the week of June 12, Harrison Manufacturing produced and shipped 16,000 units of its aluminum wheels: 3,600 units of Model A and 12,400 units of Model B. The cycle time for Model A is 0.80 hours and that of Model B is 0.55 hours. The total net work hours for the aluminum wheel value stream for the week were 15,000. The following costs were incurred: Salaries/ Wages $18,000 Machining Materials Other Total Cost Order $18,800 processing Production 187,200 187,200 planning Purchasing 27,000 27,000 Stamping $355,000 95,500 Welding 150,000 42,000 $36,400 42,000 $19,000 445,900 12,000 256,000 Cladding 490,000 490,000 Tasting 10,500 10,500 Packaging and 8,000 8,000 shipping Invoicing Total Required: $1,005,000 12,600 $341,600 $78,400 $31,000 12,600 $1,456,000 1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost. Round your answer to the nearest dollar amount. 91 per unit 2. Model A is responsible for 40 percent of the materials cost. Using the average conversion cost approach, calculate the unit cost for Models A and B. Round your answers to the nearest dollar amount. Unit Cost Model A Model R 100 100 3. What if Model A and Model B are not homogeneous products? Assume the serne materials usage as in Requirement 2. Use DBC to calculate the unit cost for the two products. Round your interim calculations and final answers to the nearest dollar amount. Unit Cost Model A Model B Explain when and why this cost is more accurate than the unit cost calculated in Requirement 2. Explain why DBC is a good approach for value-stream costing. DBC should be used the products) homogeneous products. Even when the products are to use DBC more accurate as it approximates ARC assignments.
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