Swifty Visuals produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products.
Department Costs:
Binding - $297,000
Printing - $955,500
Product design - $234,000
General - $727,500
Total overhead costs - $2,214,000
Activity Pool:
Binding
Printing
Product design
General
Total overhead costs
Cost Driver:
Number of units
Machine hours
Change orders
None
Other information is as follows:
Tablets:
Units - 62,500
Direct materials cost per unit - $3.00
Direct labor cost per unit - $7.00
Direct labor hours - 30,000
Machine hours - 150,000
Change orders - 1,500
Books:
Units - 30,000
Direct materials cost per unit - $10
Direct labor cost per unit - $14.00
Direct labor hours - 19,200
Machine hours - 144,000
Change orders - 2,400
Swifty's managers have gathered the following information about selling and administrative costs.
Activity Pool:
Shipping
Advertising
Commissions
Total selling and administrative costs
Total Cost:
Shipping - $300,000
Advertising - $187,500
Commissions - $168,125
Total selling and administrative costs - $655,625
Cost Driver:
Pounds shipped
Number of mailings
Sales price
Tablets:
Weight - 20,000 pounds
Advertising mailings - 25,000
Sales commission - 5% of sales price
Selling price per unit - $35
Books:
Weight - 40,000 pounds
Advertising mailings - 100,000
Sales commission - 8.00% of sales price
Selling price per unit - $75
(a)
Using the information given here, calculate the product margin per unit for Tablets and Books using the traditional costing system. (Round all rates and final answers to 2 decimal places, e.g. 15.25.)
Tablets:
Product margin per unit - $
Books:
Product margin per unit - $
