Question

Ravelo Corporation has provided the following data from its activity-based costing system: Activity Cost Pools Estimated Overhead Cost Expected Activity Assembly $ 504,520 47,000 machine-hours Processing orders $ 57,263 1,400 orders Inspection $ 80,589 1,410 inspection-hours Data concerning the company's product L19B appear below: Annual unit production and sales 490 Annual machine-hours 1,050 Annual number of orders 130 Annual inspection hours 80 Direct materials cost $ 43.74 per unit Direct labor cost $ 16.45 per unit According to the activity-based costing system, the unit product cost of product L19B is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

Cost per unit = $103.37 under activity based costing.

Explanation:

Calculating Activity cost rate per activity

Activity                    Cost               Cost Driver              Rate = Cost/Cost Driver

Assembly                 $504,520         47,000 MH             $10.734 MH

Processing Order    $57,263          1,400 orders            $40.90 per order

Order Inspection     $80,589           1.410 insp hours      $57.155 per hour

Cost of product L19B

Assembly = $10.734 X 1,050 = $11,270.7

Processing order = $40.90 X 130 = $5,317

Order Inspection = $57.155 X 80 = $4,572.4

Direct Material = $43.74 X 490 units = $21,432.6

Direct Labor = $16.45 X 490 units = $8,060.5

Total product cost = $50,653.2

Total units produced and sold = 490

Cost per unit = $50,653.2/490 = $103.37 under activity based costing.