Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies: Macaroon, Sugar, and...
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Accounting
Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies: Macaroon, Sugar, and Buttercream. Based on budgetary projections, the information listed below is available:
Macaroon
Sugar
Buttercream
Projected sales in units
500,000
800,000
600,000
PER UNIT data:
Selling price
$0.80
$0.75
$0.60
Direct materials
$0.20
$0.15
$0.14
Direct labor
$0.04
$0.02
$0.02
Hours per product line:
Macaroon
Sugar
Buttercream
Direct labor hours
1000
800
600
Oven hours
500
800
600
Packaging hours
250
400
300
Total overhead costs and activity levels for the year are estimated as follows:
Activity
Overhead costs
Activity levels
Direct labor
2,400 hours
Oven
$209,000
1,900 oven hours
Packaging
$151,000
950 packaging hours
$360,000
Using a traditional system (with direct labor hours as the overhead allocation base), compute total cost per unit of sugar cookie.
Answer & Explanation
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