Solution :
Standard Deluxe Total
Total cost of direct material 245000 155000 400000
Total cost of direct labor 650000 250000 900000
Total machine hours 150000 100000 250000
Total setups 75 125 200
Total material pounds 18000 9000 27000
Total direct hours of labor 6000 3750 9750
No. of units shipped 20000 5000 25000
a). Cost drivers rates :
Receiving 150 Percentage of materials(dollars)
Manufacturing 13.20 Per machine hour
Engineering 11000 Per set up
Machine set up 4500 per set up
Shipping 40 per unit
b). Units product cost
Standard Deluxe
Direct cost 895000 405000
(245000+650000) (155000+250000)
Overhead :
Receiving 367500 232500
(245000 x 150%) (155000 x 150%)
Manufacturing 1980000 1320000
(150000 x 13.2) (100000 x 13.2)
Engineering 825000 1375000
(75 x 11000) (125 x 11000)
Machine set up 337500 562500
(75 x 4500) (125 x 4500)
Shipping 800000 200000
(20000 x 40) (5000 x 40)
Total costs 5205000 4095000
No of units 20000 5000
Unit cost 260.25 819
(5205000/20000) (4095000/5000)