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Using The Current Cost Accounting System What Cost Per Unit

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Exhibit 3
Specialty Products Inc., manufactures household items sold at trade shows. The items,
classified as either Trinkets or Widgets, are manufactured on a common assembly line. Other
than indirect labor (discussed further below), the plant operates at full capacity.
The current cost accounting system allocates all overhead to the two products on the basis of
machine hours. The following information applies to the month of July:
Trinkets
Widgets
Total
Number of Batches Produced
80
35
115
Number of Units
2400
350
2750
Number of Machine Hours
1600
175
1775
Number of Inspections
160
70
230
Number Engineering Changes
1
3
4
Direct Labor Salary amp; Benefits per Unit
$40
Direct Material per Unit
$26
$14
$8
The General Ledger also shows that the following amounts were spent on indirect resources:
Indirect Labor Salaries and Benefits
$36,000
Computer Resources
Utilities amp; Misc. Other
$12,000
$25,000
$73,000
A.
REQUIRED: Using the current cost accounting system, what cost per unit would be reported
for the two products for the month of July?
Trinket $
unit
Widget $
unitBusiness