Ringing Solutions produces 12,000 units of a cell phone. The production requires prime costs of $400,000, uses 2,500 machine hours, and takes 1,800 setup hours. The activity rates are $50 per machine hour and $130 per setup hour. What is the unit cost of a cell phone

$63

Step-by-step explanation:

Given:

Total units of cell phones produced = 12,000

Prime cost = $400,000

Number of machine hours = 2,500

Number of setup hours = 1,800

Cost per machine hour = $50

Cost per setup hour = $130

Now, total cost of all cell phones = Prime cost + machine hours cost + setup hours cost

So, Total cost = $400,000 + (2500 × $50) + (1800 × $130)

                       = $400,000 + $125,000 + $234,000

                       = $759,000

Now, total cost of 12,000 units = $759,000

∴ Cost of 1 unit = Total cost ÷ Number of units

⇒ Cost of 1 unit =

Therefore, the unit cost of a cell phone is approximately 63 dollars.

step-by-step explanation:

56

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