Virigina Company manufactures three products in its plant: X, Y, and Z.
Unit costs and machine hour usage for the three products are:
Direct materials
Direct labor
Machine hours
X
$38
$17
3
Y
$32
$11
2
Z
$44
$15
4
Budgeted production (units)
25,000 33,000 14,000
Now assume that Virigina uses an ABC system with three cost drivers: machine hours, setups, and number of parts.
Product X requires two setups per period, and requires five distinct parts. Product Y requires four setups, and eight parts. Product Z requires ten setups and fifteen parts.
Cost pools:
Setups
Machine hours
Parts
528,300
2,797,400
766,100
4,091,800
Compute the unit cost of production for products X, Y, and Z using the ABC system.