- Required information Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. V-1 V-2 Units produced 10,000 1,000 Direct materials cost per unit $ 2 $ 4 Machine hours per unit Production runs per month 1 80 2 40 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Machine depreciation $ 84,000 Setup labor Material handling Total 37,200 18,240 $139,440 Required: a. Compute the unit costs for the two products V-1 and V-2 using the current costing system at Upriver (using machine hours as the allocation basis). (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Compute the unit costs for the two products V-1 and V-2 using the proposed ABC system at Upriver. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Unit Cost V-1 V-2 a. Using current costing system b. Using proposed ABC system

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 30P: Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following...
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Required information
Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two
products follow.
V-1
V-2
Units produced
10,000
1,000
Direct materials cost per unit
$
2
$
4
Machine hours per unit
Production runs per month
1
80
2
40
Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the
plant follow.
Machine depreciation
$ 84,000
Setup labor
Material handling
Total
37,200
18,240
$139,440
Required:
a. Compute the unit costs for the two products V-1 and V-2 using the current costing system at Upriver (using machine hours as the
allocation basis). (Do not round intermediate calculations. Round your answers to 2 decimal places.)
b. Compute the unit costs for the two products V-1 and V-2 using the proposed ABC system at Upriver. (Do not round intermediate
calculations. Round your answers to 2 decimal places.)
Unit Cost
V-1
V-2
a. Using current costing system
b.
Using proposed ABC system
Transcribed Image Text:- Required information Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. V-1 V-2 Units produced 10,000 1,000 Direct materials cost per unit $ 2 $ 4 Machine hours per unit Production runs per month 1 80 2 40 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Machine depreciation $ 84,000 Setup labor Material handling Total 37,200 18,240 $139,440 Required: a. Compute the unit costs for the two products V-1 and V-2 using the current costing system at Upriver (using machine hours as the allocation basis). (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Compute the unit costs for the two products V-1 and V-2 using the proposed ABC system at Upriver. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Unit Cost V-1 V-2 a. Using current costing system b. Using proposed ABC system
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