Question

Value-Stream Costing Objective

During the week of June 12, Harrison Manufacturing produced and shipped 16,600 units of its aluminum wheels: 4,400 units of Model A and 12,200 units of Model B. The following costs were incurred:

	Materials		Salaries/ Wages		Machining		Other		Total Cost
Order processing			$18,000						$18,000
Production planning			64,200						64,200
Purchasing			27,000						27,000
Stamping	$370,000		37,000		$36,800		$18,400		462,200
Welding	150,000		42,000		42,000		12,000		246,000
Cladding	210,000								210,000
Testing			10,000						10,000
Packaging and shipping			8,000						8,000
Invoicing			14,000						14,000
Total	$730,000		$220,200		$78,800		$30,400		$1,059,400

Required:

1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost. Round your answer to the nearest dollar amount.
$ per unit

2. Calculate the unit cost for Models A and B. Round your answers to the nearest dollar amount.

	Unit Cost
Model A	$
Model B	$

3. What if Model A is responsible for 40 percent of the materials cost? Calculate the unit materials cost for Models A and B. Round your answers to the nearest dollar amount.

	Unit Cost
Model A	$
Model B	$

Calculate the total unit cost for Models A and B. Round your interim calculations and final answers to the nearest dollar amount.

	Unit Cost
Model A	$
Model B	$

Answer 1

Part- A & B

Unit Cost := Total Cost / Total Unit

=1059400/(4400+12200)= $63.82

Eac Model A & will be the same cost $63.82

Part-C

Model A ( Unit Material Cost )= Total Cost/ Total Unit

(730000*40%)/4400= $66.36

Model B ( Unit Material Cost )= Total Cost/ Total Unit

(730000*60%)/12200= $35.90

Computation of Conversion Cost

Unit Conversion Cost =Total Cost/ Total Unit

=(1059400-730000)/(4400+12200)= $19.84

Part-d Computation of Total Unit cost
Particular	Material Cost	Conversion Cost	Total
Model A	$66	$20	$86
Model B	$36	$20	$56