Question:
Computing indirect manufacturing costs per unit
The following information is provided for the Orbit Antenna, Corp., which manufactures two products: Lo-Gain antennas, and Hi-Gain antennas for use in remote areas.
|
Activity
|
Cost
|
Cost Driver
|
|
Setup
|
$ 57,000
|
Number of setups
|
|
Machine maintenance
|
27,000
|
Machine hours
|
|
Total indirect manufacturing costs
|
$ 84,000
|
|
|
Lo-Gain
|
Hi-Gain
|
Total
|
|
Direct labor hours
|
1,400
|
3,600
|
5,000
|
|
Number of setups
|
30
|
30
|
60
|
|
Number of machine hours
|
1,800
|
1,200
|
3,000
|
Orbit plans to produce 75 Lo-Gain antennas and 150 Hi-Gain antennas.
Requirements
1. Compute the ABC indirect manufacturing cost per unit for each product.
2. Compute the indirect manufacturing cost per unit using direct labor hours from the single-allocation-base system.