Product costing- traditional and activity-based
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A corp produces 200,000,000 units if produce X and 80,000,000 of product Y with the following costs and machine hours.
Direct costs Prod X Prod Y Total
(material plus labor) $18,000,000 $8,000,000
Environmental support 28,000,000
Non Environmental
Support 44,000,000 58,000,000
Total Support $44,000,000 $86,000,000 $130,000,000
Total Machine Hours 20,000,000 12,000,000 32,000,000
A. Determine total product cost per unit for each product using a traditional costing system with machine hours as the cost driver.
B. Determine total product cost per unit for each product using an activity based costing system. Use the number of units as the cost driver for each activity.
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The solution determines the product costing, traditional and activity-based.
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