Question

Ravelo Corporation has provided the following data from its activity-based costing system: Activity Cost Pools Estimated Overhead Cost Expected Activity Assembly $ 514,520 52,000 machine-hours Processing orders $ 62,263 1,900 orders Inspection $ 85,589 1,910 inspection-hours Data concerning the company's product L19B appear below: Annual unit production and sales 590 Annual machine-hours 1,150 Annual number of orders 230 Annual inspection hours 180 Direct materials cost $ 53.74 per unit Direct labor cost $ 26.45 per unit According to the activity-based costing system, the unit product cost of product L19B is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Unitary cost= $131.02

Step-by-step explanation:

Giving the following information:

L19B:

Annual unit production and sales 590

Annual machine-hours 1,150

Annual number of orders 230

Annual inspection hours 180

Direct materials cost $ 53.74 per unit

Direct labor cost $ 26.45 per unit

First, we need to calculate the predetermined overhead rate for each activity:

Assembly= 514,520/52,000= $9.9 per machine-hour

Processing orders= 62,263/1,900= $32.77 per order

Inspection= 85,589/1,910= $44.81per inspection-hour

Now, we can calculate the total allocated overhead cost for product L19B:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Assembly= 9.9*1,150= 11,385

Processing orders= 32.77*230= 7,537.1

Inspection= 44.81*180= 8,065.8

Total= 29,987.9

Finally, the cost per unit:

Unitary overhead= 29,987.9/590= 50.83

Unitary cost= 53.74 + 26.45 + 50.83

Unitary cost= $131.02