A manufacturing company has two Divisions: Amateur and Pro.Estimated activity for the next year is:
Amateur Pro Company Total
Division Division (Amateur + Pro)
Direct Labourhours: 9,000 hrs 1,000hrs 10,000 hrs
MachingHours: 2,700 hrs 600 hrs 3,300 hrs
UnitsProduced: 800 units 100 units 900 units
ProductionBatches: 1batch 49 batches 50batches
Costs:Labour: $144,000
Set-ups: $ 7,500
Machining: $ 33,000
Total costs: $184,500
Otherinformation:
- The Amateur division makes products on a continual basisthroughout the year.
- The Pro division makes products in batches based ondemand.
- Both divisions use the same machines and the sameemployees.
- There are no materials.
- A set-up is required for each production batch.
- Machining costs are allocated based on Machine hours.
Required
- What is the cost of a unit for each of the Amateur andPro Divisions, assuming that total costs are captured in a singlecost pool allocated on the basis of Direct Labour Costs (ie, noABC)?
- What is the cost of a unit for each of the Amateur andPro Divisions, assuming that the company uses Activity BasedCosting?
