Problem
Stockin Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products.
|
Activity Pool
|
Department Costs
|
Cost driver
|
|
Binding
|
$258,615.00
|
Number of units
|
|
Printing
|
878,419.50
|
Machine hours
|
|
Product design
|
188,034.00
|
Change orders
|
|
General
|
483,031.50
|
None
|
|
Total overhead costs
|
$1,808,100.00
|
|
Other information is as follows:
|
Tablets
|
Books
|
|
Units
|
82,100
|
20,525
|
|
Direct materials cost per unit
|
$4.00
|
$12.00
|
|
Direct labor cost per unit
|
$5.00
|
$10.00
|
|
Direct labor hours
|
28,700
|
14,350
|
|
Machine hours
|
161,400
|
121,050
|
|
Change orders
|
1,694
|
3,388
|
Determine the unit product cost for Tablets using the activity-based costing system.