Gamble Manufacturing produces two modems, one for laptop computers and the other

Question

Gamble Manufacturing produces two modems, one forlaptop computersand the other fordesktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the modems.

Compute the cost per unit oflaptopand desktop modems, assuming that Gamble made 310 units of each type of modem.(Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Gamble Manufacturing produces two modems, one forlaptop computersand the other fordesktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the modems.

Explanation / Answer

Cost of Laptop modem:

Overheads:

a)Material handling- 2% of 5700= 114

b)Poduction set up-31X110= 3410

c)Assembly - 43X3= 129

d)Inspection - 6800X1.40= 9520

e)Shipping - 65X10= 650

1)Total cost of Overheads(a to e)=13823

2)Material cost= 5700

3)Labour cost= 1360

Cost of 310 units of Laptop modems(1+2+3)= 30883

Coat of each unit: 67.36

Cost of Desktop modem:

Overheads:

a)Material handling- 2% of 7800= 156

b)Poduction set up- 12X110= 1320

c)Assembly - 24X3= 72

d)Inspection - 5400X1.40= 7560

e)Shipping - 25X10= 250

1)Total cost of Overheads(a to e)= 9358

2)Material cost= 7800

3)Labour cost= 1250

Cost of 310 units of Desktop modems(1+2+3)= 18408

Coat of each unit: 59.38

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