Larner Corporation is a diversified manufacturer of industrial goods. The compan

Question

Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates Activity Rates Activity Cost Pool Labor-related Machine-related Machine setups Production orders Shipments General factory $ 10.00 per direct labor-hour $ 6.00 per machine-hour 80.00 per setup $200.00 per order $200.00 per shipment $ 6.00 per direct labor-hour Cost and activity data have been supplied for the following products J78 B52 Direct materials cost per unit Direct labor cost per unit Number of units produced per year $ 2.50 34.00 $ 5.00 10.00 4,000 200 Total Expected Activity Direct labor-hours Machine-hours Machine setups Production orders Shipments J78 1,100 2,300 6 3 B52 30 40

Explanation / Answer

OH cost per unit J 78 B 52 Activity Rate Activity OH cost Activity OH cost labor related 10 1100 11000 30 300 machine related 6 2300 13800 40 240 machine setup 80 6 480 2 160 Production order 200 3 600 2 400 Shipment 200 5 1000 2 400 General factory 6 1100 6600 30 180 Total Activity cost 33480 1680 Divide: Number of Units 4000 200 Overheads cost per unit 8.37 8.4 Unit Product cost J 78 B 52 Material cost per unit 2.5 34 Labouur per unit 5 10 OH per unit 8.37 8.4 Total cost per unit 15.87 52.4

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