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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Calculating ABC Unit Costs

Community Credit Union has collected the following information for four activities and two types of credit cards:

Chapter 5, Problem 31BEB, Calculating ABC Unit Costs Community Credit Union has collected the following information for four

There are 12,500 holders of Silver cards and 50,000 holders of Premium cards.

Required:

Calculate the unit cost (rounded to the nearest cent) for Silver and Premium credit cards.

To determine

Compute unit costs of silver and premium credit cards.

Explanation

Unit Costs:

The cost which is incurred by the company to make one unit of finished goods is known as unit cost. It includes both variable and fixed cost incurred by the company to make a finished good.

Calculate unit cost of Company CCU’s silver credit cards:

Particulars

Silver (A)

($)

Activity Rate (B)

($)

Amount (C)

C=A×B

($)

Processing transactions20,0000.204,000
Preparing statements20,0000.8517,000
Answering questions40,0002.0080,000
Providing ATM’s80,0001.80144,000
Total costs  245,000
Unit costs  19.60

Table (1)

Therefore, unit cost of Company CCU’s silver credit cards is $19.60.

Working Note:

Calculation of unit costs:

Unit Costs=Total CostsNumber Of Units=$245,00012,500=$19

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