Question

Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates:

Activity Cost Pool Activity Rates
Labor-related $9.00 per direct labor-hour
Machine-related $7.00 per machine-hour
Machine setups $60.00 per setup
Production orders $200.00 per order
Shipments $100.00 per shipment
General factory $7.00 per direct labor-hour

Cost and activity data have been supplied for the following products:

J78 B52
Direct materials cost per unit $3.00 $36.00
Direct labor cost per unit $5.00 $7.00
Number of units produced per year 4,000 200

Total Expected Activity
J78 B52
Direct labor-hours 800 40
Machine-hours 3,300 20
Machine setups 3 3
Production orders 8 3
Shipments 12 3

Required:
Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

Larner Corporation

Unit cost of J78 B52

$17.72 $52.30

Step-by-step explanation:

a) Data and Calculations:

Activity Cost Pool Activity Rates

Labor-related $9.00 per direct labor-hour

Machine-related $7.00 per machine-hour

Machine setups $60.00 per setup

Production orders $200.00 per order

Shipments $100.00 per shipment

General factory $7.00 per direct labor-hour

b) Cost and activity data have been supplied for the following products:

J78 B52

Unit Total Unit Total

Direct materials cost per unit $3.00 $12,000 $36.00 $7,200

Direct labor cost per unit $5.00 $20,000 $7.00 $1,400

Manufacturing overhead costs $38,880 $1,860

c) Total manufacturing costs $70,880 $10,460

Number of units produced per year 4,000 200

d) Unit cost $17.72 $52.30

e) Total Expected Activity and Costs:

J78 B52

Unit Total Unit Total

Direct labor-hours 800 $7,200 40 $360

Machine-hours 3,300 23,100 20 140

Machine setups 3 180 3 180

Production orders 8 1,600 3 600

Shipments 12 1,200 3 300

General factory 800 5,600 40 280

Total overhead $38,880 $1,860