Solomon Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow: Basco Boards Shimano Boards Production costs Direct materials $ 25.40 $ 38.80 Direct labor $ 31.40 $ 53.80 Allocated overhead $ 15.70 $ 20.80 Total units produced and sold 5,400 9,400 Total sales revenue $ 491,400 $ 1,259,600 Solomon allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $61,000 per quarter, to the two products equally. Required Compute the per-unit cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Compute the profit for each product.

The Basco per unit cost is $5.65

The  Shimano per unit cost is $3.24

The profit of Basco is $99,900. The profit of Shimano  is $193,640

Explanation:

In order to calculate the per-unit cost for each product we would have to make the following calculations according to the given data:

                                                                      Basco boardsShimano boards

Direct material                                            $25.40                 $38.80

Direct labor                                                     $31.40                $53.80

Allocated overhead                                      $15.70       $20.80

Delivery expenses and sales commission      $5.65          $3.24

Unit cost                                                              $78.15        $116.64

Allocation of delivery expenses and sales commission on an equal basis = $61,000 / 2 = $30,500.

Basco per unit cost = $30,500 / 5,400 = $5.65

Shimano per unit cost = $30,500 / 9,400 = $3.24

To calculate the profit for each product we would have to make the following calculations:

                                     Basco                       Shimano

Sales                   $491,400                         $1,259,600

Cost of goods sold  $391,500 (5,400 * 72.5)$1,065,960 (9,400 * 116.64)

Profit                    $99,900                         $193,640

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