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Determine the unit cost for each of the two products using activity-based costing

(See attached file for full problem description)

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4-26 Activity-based costs VG Company has identified the following cost pools
and cost drivers:
Cost Pools Activity Costs Cost Drivers
Machine setup $360,000 6,000 setup hours
Materials handling $100,000 50,000 pounds of material
Electric power $40,000 80,000 kilowatt hours

The following information pertains to the production of V203 and G179.
Item V203 G179
Number of units produced 5,000 15,000
Direct materials cost $25,000 $33,000
Direct labor costs $14,000 $16,000
Number of setup hours 120 150
Pounds of materials used 5,000 10,000
Kilowatt hours 2,000 3,000

Determine the unit cost for each of the two products using activity-based costing.
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Solution Summary

The expert determines the unit cost for each of the two products using activity-based costing.

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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