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    Slybone's Avatar
    Slybone Posts: 33, Reputation: 1
    Junior Member
     
    #1

    Jul 13, 2008, 03:50 PM
    Computing ABC Product Costs
    Attached is the problem I am currently facing and I do not really understand what to do. I am reading through my textbook and it is not very clear on how to do this. Could someone please clarify?
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    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Jul 14, 2008, 12:09 AM
    For the overhead, you've already got the cost per activity. You need now only multiply them out by how many each type of product uses and add them up. This is mostly math, really, not accounting. It's liking making two recipes and you need 4 eggs for one and 2 eggs for the other, a total of 6 eggs. And a half-dozen eggs cost $.66. So how much per 1 egg, and therefore how much for the recipe using 4 eggs and how much for the one using 2 eggs?

    As for labor cost per unit. Labor is $20 per hour. Rims use .30 hours per unit. What is the cost of that per unit? Etc. (I personally would prefer getting the hours needed in total for each product and multiplying that by the $20 per hour, but these templates force one to do things certain ways.)

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