# *How Do You Find The Direct Materials Cost Per Unit And

Telecom Company produces a cell phone that sells for \$150, and a smart phone that sells for \$350. Last year, total overhead costs of \$550,000 were allocated based on direct labor hours. A
total of 12,000 direct labor hours were required last year to build 6,000 cell phones (2 hours per unit), and 10,000 direct labor hours were required to build 2,000 smart phones {5 hours per unit).
Total direct labor and direct materials costs for last year were: Cell Phone Smart Phone Direct materials \$2?0,000 \$160,000
Direct labor 300,000 200,000 Management of Telecom Company would like to use activity-based costing to allocate overhead
rather than using one plantwide rate based on direct labor hours. The following estimates are for
the activities and related cost drivers identiļ¬ed as having the greatest impact on overhead costs. 3) Estimated Cost Estimated Driver Activity
Overhead Cell Smart Activity Cost Driver Costs Phone Phone Total
Production Number of runs production runs \$200,000 20 5 25
Quality Inspection inspections hours 150,000 600 1,400 2,000
Packaging and Number of units shipping shipped 200,000 6,000 2,000 8,000 Total \$550,000 (1) Calculate the direct materials cost per unit and direct labor cost per unit for each Managerial Accounting