HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below. Activity Cost Cost Driver
Material handling 225.000 Number of parts
Material insertion 2,475.000 Number of parts
Automated machinery 840.000 Machine hours
Finishing 170,000 Direct labor hours
Packaging 170.000 Orders shipped
Total $3.880.000
The following information pertains to the three product lines for next year:
Economy Standard Deluxe
Units to be produced 10,000 5,000 2,000
Orders to be shipped 1,000 500 200
Number of parts per unit 10 15 25
Machine hours per unit 1 3 5
Labor hours per unit 2 2 2
a. Under an activity-based costing system, what is the per-unit cost of Economy?
A. $164.
B. $141.
C. $225.
D. $228.
E. An amount other than those listed above.
b. Assume that HiTech is using a volume-based costing system, and the preceding manufacturing costs are applied to all products based on direct labor hours. How much of the preceding cost would be assigned to Deluxe?
A. $456,471.
B. $646.471.
C. $961,176.
D $1,141,176.
E. An amount other than those listed above.