Dobles Corporation has provided the following data from its activity-based costing system: Activity Cost Pools Estimated Overhead Cost Expected Activity Assembly $228,060 18,000 machine hours Processing orders $34,068 1,200 orders Inspection $125,560 1,720 inspection hours The company makes 420 units of product D28K a year, requiring a total of 460 machine hours, 80 orders, and 10 inspection-hours per year. The product's direct materials cost is $48.96 per unit, and its direct labor cost is $25.36 per unit. Use activity-based costing to compute the unit product cost of product D28K.

Dobles Corporation

The unit product cost of product D28K is:

$144.01

Explanation:

a) Data and Calculations:

Activity Cost Pools    Estimated Overhead Cost   Expected Activity

Assembly                     $228,060                            18,000 machine hours

Processing orders         $34,068                              1,200 orders

Inspection                    $125,560                               1,720 inspection hours

Units of D28K produced per year = 420 units

D28K requirements:

Machine hours     460

Orders                    80

Inspections             10

Direct materials cost per unit = $48.96

Direct labor cost per unit = $25.36

Activity rate:

Assembly                     $228,060/18,000 = $12.67 per machine hour

Processing orders         $34,068/1,200 = $28.39 per order

Inspection                    $125,560/1,720 = $73 per inspection-hour

Cost of D28K:

Machine hours     460 * $12.67 =   $5,828

Orders                    80 * $28.39 = $22,712

Inspections             10 * $73 =           $730

Total overhead costs =                $29,270

Overhead cost per unit = $69.69 ($29,270/420)

Unit Cost of D28K:

Direct materials cost per unit = $48.96

Direct labor cost per unit =        $25.36

Overhead cost per unit =          $69,69

Total unit cost =                         $144.01

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