Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $31.58 per unit, while product B has been assigned $8.69 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Activity Costs $ 198,000 Machine setup Materials handling 168,000 40,000 Electric power The following cost information pertains to the production of A and B, just two of Hakara's many products: Number of units produced Direct materials cost Direct labor cost Number of setup hours Pounds of materials used Kilowatt-hours Product A Product B A 4,000 $ 31,000 $ 33,000 Cost per Unit 200 1,000 4,000 Cost Drivers Setup hours Pounds of materials Kilowatt-hours B 20,000 $ 33,000 $ 33,000 Activity Driver Consumption 2,000 21,000 40,000 200 2,000 4,000 Required: 1. Use activity-based costing to determine a unit cost for each product. (Round your final answers to 2 decimal places.)

Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $31.58 per unit, while product B has been assigned $8.69 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Activity Costs $ 198,000 Machine setup Materials handling 168,000 40,000 Electric power The following cost information pertains to the production of A and B, just two of Hakara's many products: Number of units produced Direct materials cost Direct labor cost Number of setup hours Pounds of materials used Kilowatt-hours Product A Product B A 4,000 $ 31,000 $ 33,000 Cost per Unit 200 1,000 4,000 Cost Drivers Setup hours Pounds of materials Kilowatt-hours B 20,000 $ 33,000 $ 33,000 Activity Driver Consumption 2,000 21,000 40,000 200 2,000 4,000 Required: 1. Use activity-based costing to determine a unit cost for each product. (Round your final answers to 2 decimal places.)

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Description: Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocationsystem, product A has been assigned overhead of $31.58 per unit, while product B has been assigned $8.69 per unit. Manage

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PB: The following product costs are available for Stellis Company on the production of erasers: direct...

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Medical Tape makes two products: Generic and Label. It estimates it will produce 423,694 units of Generic and 652,200 of Label, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: How much is the overhead allocated to each unit of Generic and Label?
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