HiTech Products manufactures three types of CD players: Cheap, Econo and Deluxe.
ID: 2510185 • Letter: H
Question
HiTech Products manufactures three types of CD players: Cheap, Econo and Deluxe. HiTech uses an activity-based product costing system. The company has identified five activities. Each activity, its cost and related activity driver are identified below Activity Material handling Material insertion Automated machinery Finishing Packaging Total manufacturing cost Activity Diiver Number of parts Number of parts Machine hours Labour hours Orders shipped Cost 225 000 $2 475 000 $840 000 $170 000 $170 000 $3 880 000 The following information pertains to each product line of CD players eap cono Deluxe 2000 Units to be produced Orders to be shipped Number of parts per unit Machine hours per unit Labour hours per unift 10 000 5000 500 15 200 25 1000 10 Under an activity-based product costing system, what is the cost per unit of Cheap? A. $141.00 B. $272.00 C. $164.00 D. $228.24Explanation / Answer
Activity Activity Cost Quantity of Activity Driver Rate per Activity Driver Cost attributable to Cheap Cheap Econo Deluxe Total Material handling 2,25,000 1,00,000 75,000 50,000 2,25,000 1.00 1,00,000 Material insertion 24,75,000 1,00,000 75,000 50,000 2,25,000 11.00 11,00,000 Automated Machinery 8,40,000 10,000 15,000 10,000 35,000 24.00 2,40,000 Finishing 1,70,000 20,000 10,000 4,000 34,000 5.00 1,00,000 Packaging 1,70,000 1,000 500 200 1,700 100.00 1,00,000 Total 38,80,000 Total 16,40,000 No. of unit 10,000 Per unit Cost 164.00
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