Computing product cost with given activity allocation rates
Using automated production processes, Raspino Videos produces two kinds of camcorders. N100 is an analog recorder and D200 is a digital recorder. The company has found activity-based costing useful in assigning overhead costs to its products. It has identified the following five major activities involved in producing the camcorders.
Materials receiving and handling
Cost of materials
3% of materials cost
Number of setups
$800 per setup
Number of parts
$10 per part
$25 per minute
Packing and shipping
Number of orders
$80 per order
Activity measures for the two kinds of camcorders follow.
a. Compute the cost per unit of N100 and D200, assuming that Raspino made 1,000 units of each type of camcorder.
b. Explain why the D200 digital camcorders cost more to make although their direct costs are less than those for the N100 analog camcorders.