Question

Dobles Corporation has provided the following data from its activity-based costing system: Activity Cost Pools Estimated Overhead Cost Expected Activity Assembly $228,060 18,000 machine hours Processing orders $34,068 1,200 orders Inspection $125,560 1,720 inspection hours The company makes 420 units of product D28K a year, requiring a total of 460 machine hours, 80 orders, and 10 inspection-hours per year. The product's direct materials cost is $48.96 per unit, and its direct labor cost is $25.36 per unit. Use activity-based costing to compute the unit product cost of product D28K.

Answer 1

Dobles Corporation

The unit product cost of product D28K is:

$144.01

Step-by-step explanation:

a) Data and Calculations:

Activity Cost Pools Estimated Overhead Cost Expected Activity

Assembly $228,060 18,000 machine hours

Processing orders $34,068 1,200 orders

Inspection $125,560 1,720 inspection hours

Units of D28K produced per year = 420 units

D28K requirements:

Machine hours 460

Orders 80

Inspections 10

Direct materials cost per unit = $48.96

Direct labor cost per unit = $25.36

Activity rate:

Assembly $228,060/18,000 = $12.67 per machine hour

Processing orders $34,068/1,200 = $28.39 per order

Inspection $125,560/1,720 = $73 per inspection-hour

Cost of D28K:

Machine hours 460 * $12.67 = $5,828

Orders 80 * $28.39 = $22,712

Inspections 10 * $73 = $730

Total overhead costs = $29,270

Overhead cost per unit = $69.69 ($29,270/420)

Unit Cost of D28K:

Direct materials cost per unit = $48.96

Direct labor cost per unit = $25.36

Overhead cost per unit = $69,69

Total unit cost = $144.01