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:
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| Macaroon | Sugar | Buttercream |
| Projected sales in units | 500,000 | 800,000 | 600,000 |
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|
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| PER UNIT data: |
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|
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| Selling price | $0.80 | $0.75 | $0.60 |
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|
|
|
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| Direct materials | $0.20 | $0.15 | $0.14 |
| Direct labor | $0.04 | $0.02 | $0.02 |
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|
|
|
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| 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.
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