Question

Ringing Solutions produces 12,000 units of a cell phone. The production requires prime costs of $400,000, uses 2,500 machine hours, and takes 1,800 setup hours. The activity rates are $50 per machine hour and $130 per setup hour. What is the unit cost of a cell phone? (Note: Round answer to two decimal places.)

Answer 1

Answer: $63.25

Step-by-step explanation:

Total Cost = Prime cost + Machining Cost + Setup Cost

= $400,000 + (2500 × 50) + (1800 × 130)

= $400,000 + $125,000 + $234,000

= $759,000

Units = 12,000

unit cost of a cell phone:

`=(Total\ cost)/(Units)`

`=(759,000)/(12,000)`

= $63.25