Final answer:
Calculating the cost per unit using traditional and ABC costing involves allocating total costs to products based on labor hours or multiple drivers respectively. The supervisor's cost is divided amongst products based on the units produced. The final cost per unit for each product depends on the cost allocation method used.
Step-by-step explanation:
To calculate the cost of each unit of the products manufactured by Priya Industries using Traditional Costing and ABC Costing methods, we need to allocate the total costs to each product based on appropriate drivers. Traditional costing might allocate costs on a single driver, usually labor or machine hours. On the other hand, ABC costing uses multiple drivers such as labor hours, machine hours, and the number of units produced to allocate costs more accurately.
For Traditional Costing:
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- Determine the cost per labor hour by dividing total labor-related costs by total labor hours.
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- Assign costs to each product based on the number of labor hours used.
For ABC Costing:
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- Identify all individual costs and determine suitable cost drivers.
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- Categorize costs into cost pools and divide each by its respective driver to find cost rates.
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- Multiply cost rates by the consumption of each driver by each product to get the total cost and then divide by the number of units to get the cost per unit.
The supervisor cost is allocated to the products based on the proportion of units produced. The e.