Drilling Company uses activity-based costing and provides this information: Manufacturing Activity Cost Driver Driver Rate Materials handling Number of parts $ 0.60 Machinery Number of machine hours 51.00 Assembly Number of parts 2.85 Inspection Number of finished units 30.00 Drilling has just completed 80 units of a component for a customer. Each unit required 100 parts and 3 machine hours. The prime cost is $1,300 per finished unit. All other manufacturing costs are classified as manufacturing overhead. Required: 1. Compute the total manufacturing costs and the unit costs of the 80 units just completed using ABC costing. 2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $180 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $300 per unit. Compute the full product cost per unit, including upstream, manufacturing, and downstream activities. Also compute the relative proportion of each main cost category.
Drilling Company uses activity-based costing and provides this information:
| Manufacturing Activity | Cost Driver | Driver Rate |
|---|---|---|
| Materials handling | Number of parts | $ 0.60 |
| Machinery | Number of machine hours | 51.00 |
| Assembly | Number of parts | 2.85 |
| Inspection | Number of finished units | 30.00 |
Drilling has just completed 80 units of a component for a customer. Each unit required 100 parts and 3 machine hours. The prime cost is $1,300 per finished unit. All other
Required:
1. Compute the total manufacturing costs and the unit costs of the 80 units just completed using ABC costing.
2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $180 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $300 per unit. Compute the full product cost per unit, including upstream, manufacturing, and downstream activities. Also compute the relative proportion of each main cost category.
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