Answer:
Unitary cost= $11.75
Explanation:
<u>First, we need to calculate the predetermined overhead rate for each activity:</u>
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machine Setup= 180,000/1,500= $120 per set up hour
Materials Handling= 50,000/12,500= $4 per pound
Electric Power= 20,000/20,000= $1 per kilowatt hour
Product 1:
Number of units produced 4,000
Direct Material Cost $20,000
Direct Labor Cost $12,000
Number of setup hours 100
Pounds of materials used 500
Kilowatt-hours 1,000
<u>Now, we can determine the total cost for Product 1:</u>
Total cost= 20,000 + 12,000 + (120*100 + 4*500 + 1*1,000)
Total cost= $47,000
<u>Finally, the unitary cost:</u>
Unitary cost= 47,000/4,000
Unitary cost= $11.75
