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    Expected Unit Cost for a Product

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    Dolan Company manufactures product A that sells for $9.85 each. Forecasted sales for the coming year are 500,000 units that require 2 inspections per unit. They manufacture a second product, B, that has an expected run of 300,000 units, and requires 4 inspections per unit. The two products required the same amount of time on the factory floor during manufacture. Dolan Company has projected the following costs to support the expected sales for Product A:

    Direct materials for A
    $1,625,000

    Direct labor for A
    750,000

    Overhead:
    Unit level for A
    675,000
    Total Product level, to be allocated on number of inspections needed 825,000
    Total Facility level, to be allocated on % of time on factory floor 400,000

    What is Dolan's expected unit cost for Product A?

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    Solution Preview

    Dolan Company manufactures product A that sells for $9.85 each. Forecasted sales for the coming year are 500,000 units that require 2 inspections per unit. They manufacture a second product, B that has an expected run of 300,000 units, and requires 4 inspections per unit. The two products required the same amount of time on the factory floor during manufacture. Dolan Company ...

    Solution Summary

    This solution calculates Dolan's expected unit cost for Product A using the total cost and units produced. All steps are shown with explanations.

    $2.19

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