Mikoo, Inc. manufactures a product that uses $22 in direct materials and $13 in direct labor per unit. Under the traditional costing system Mikoo uses, manufacturing overhead applied to each unit is $22. Mikoo is considering switching to an ABC system, however. Under the ABC system, the total activity cost would be $27. What is the total manufacturing cost per unit for Mikoo under the ABC system?
Solution
Mikoo, Inc. manufactures a product that uses $22 in direct materials and $13 in direct labor per unit. Under the traditional costing system Mikoo uses, manufacturing overhead applied to each unit is $22. Mikoo is considering switching to an ABC system, however. Under the ABC system, the total activity cost would be $27. What is the total manufacturing cost per unit for Mikoo under the ABC system?
Working:
Total manufacturing cost per unit for Mikoo under the ABC system = Direct material + Direct Labor + total activity cost
Total manufacturing cost per unit for Mikoo under the ABC system = 22 + 13 + 27
Total manufacturing cost per unit for Mikoo under the ABC system = $ 62
Answer
Total manufacturing cost per unit for Mikoo under the ABC system = $ 62
.
Mikoo- Inc- manufactures a product that uses $22 in direct materials a.docx
1. Mikoo, Inc. manufactures a product that uses $22 in direct materials and $13 in direct labor per
unit. Under the traditional costing system Mikoo uses, manufacturing overhead applied to each
unit is $22. Mikoo is considering switching to an ABC system, however. Under the ABC system,
the total activity cost would be $27. What is the total manufacturing cost per unit for Mikoo
under the ABC system?
Solution
Mikoo, Inc. manufactures a product that uses $22 in direct materials and $13 in direct labor per
unit. Under the traditional costing system Mikoo uses, manufacturing overhead applied to each
unit is $22. Mikoo is considering switching to an ABC system, however. Under the ABC system,
the total activity cost would be $27. What is the total manufacturing cost per unit for Mikoo
under the ABC system?
Working:
Total manufacturing cost per unit for Mikoo under the ABC system = Direct material + Direct
Labor + total activity cost
Total manufacturing cost per unit for Mikoo under the ABC system = 22 + 13 + 27
Total manufacturing cost per unit for Mikoo under the ABC system = $ 62
Answer
Total manufacturing cost per unit for Mikoo under the ABC system = $ 62
