Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 51

Activity-Based Costing Hakara Company has identified the following overhead cost pools and cost drivers:

Cost Pools	Activity Costs	Cost Driver	Driver Consumption
Machine setup	$360,000	Setup hours	3,000
Materials handling	100,000	Pounds of materials	25,000
Electric power	40,000	Kilowatt-hours	40,000

The following cost information pertains to the production of two of its products, A and B:

	A	B
Number of units produced	4,000	20,000
Direct materials cost	$40,000	$50,000
Direct labor cost	$24,000	$40,000
Number of setup hours	200	240
Pounds of materials used	1,000	3,000
Kilowatt-hours	2,000	4,000

Required Use activity-based costing to calculate the unit cost for each product.