Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $26.98 per unit, while product B has been assigned $15.22 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Machine setup Materials handling Electric power Activity Costs $ 172,000 162,000 62,000 Cost Drivers Setup hours Pounds of materials. Kilowatt-hours Activity Driver Consumption 2,000 18,000 31,000 The following cost information pertains to the production of A and B, just two of Hakara's many products: Number of units produced A 4,000 B Direct materials cost $ 23,000 10,000 $ 38,000 Direct labor cost $ 28,000 $ 37,000 Number of setup hours 100 200 Pounds of materials used Kilowatt-hours 2,000 2,000 2,000 4,000 Required: 1. Use activity-based costing to determine a unit cost for each product. (Round your final answers to 2 decimal places.) Cost per Unit Product A $ 20.65 Product B $ 11.72

Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $26.98 per unit, while product B has been assigned $15.22 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Machine setup Materials handling Electric power Activity Costs $ 172,000 162,000 62,000 Cost Drivers Setup hours Pounds of materials. Kilowatt-hours Activity Driver Consumption 2,000 18,000 31,000 The following cost information pertains to the production of A and B, just two of Hakara's many products: Number of units produced A 4,000 B Direct materials cost $ 23,000 10,000 $ 38,000 Direct labor cost $ 28,000 $ 37,000 Number of setup hours 100 200 Pounds of materials used Kilowatt-hours 2,000 2,000 2,000 4,000 Required: 1. Use activity-based costing to determine a unit cost for each product. (Round your final answers to 2 decimal places.) Cost per Unit Product A $ 20.65 Product B $ 11.72

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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