Answer:
$0.184 per unit profit
$0.30 per unit loss
Explanation:
labor hours will be the base to allocate total overhead cost:
Therefore:
Using this formula
Cost to be allocated ÷ Allocation base = Allocation rate
($60,000 + 24,000 + 12,000 + 72,000) ÷ 10,000 labor hours = $16.80 per labor hour
$16.80 x 600 labor hours = $10,080
$10,080÷ 5,000 units = $2.016 per unit
$18 – ($15.80 labor & materials + $2.016 allocated overhead)
= $0.184 per unit profit
Activity-based costing to allocate total overhead cost will be :
$6 per labor hour x 600 hours
= $3,600
Batch-level: $50 per setup x 30 = $1,500
Product-level: .20 percent x $12,000 = $2,400
Facility-level: $1 per unit x 5,000 units = $5,000
Hence:
Total allocation $3,600 + $1,500 + $2,400 + $5,000 = $12,500
Total allocated overhead$12,500
$12,500 ÷ 5,000 units = $2.50 per unit
Sales price per unit – Total product cost per unit = Profit or loss per unit
$18 – ($15.80 labor & materials + $2.50 allocated overhead)
= $0.30 per unit loss
