To calculate the full production cost per unit for each product, we can use the cost patterns

given:

Product X:

Direct Material = $27

Direct Labour = $20 (at $5 per hour)

Variable Production Overhead = $3 (at $6 per hour)

Total Variable Cost = $50

Fixed Overhead per unit = $300,000 / 25,000 hours = $12

Full Production Cost per unit = Total Variable Cost + Fixed Overhead per unit

= $50 + $12

= $62

Product Y:

Direct Material = $24

Direct Labour = $25 (at $5 per hour)

Variable Production Overhead = $6 (at $6 per hour)

Total Variable Cost = $55

Fixed Overhead per unit = $300,000 / 25,000 hours = $12

Full Production Cost per unit = Total Variable Cost + Fixed Overhead per unit

= $55 + $12

= $67

To calculate the sale price using a full cost approach, we need to add a 20% profit margin to the full
production cost per unit:

Product X:

Sale Price = Full Production Cost per unit + 20% of Full Production Cost per unit

= $62 + 0.2($62)

= $74.40
Product Y:

Sale Price = Full Production Cost per unit + 20% of Full Production Cost per unit

= $67 + 0.2($67)

= $80.40

To calculate the sale price using activity-based costing, we need to allocate the costs of each activity to
each product based on the activity usage rates given:

Activity-Based Costing for Product X:

Set-ups = $40,000 x (30 / 50) = $24,000

Material handling = $150,000 x (30 / 50) = $90,000

Inspection = $110,000 x (880 / 4,400) = $22,000

Total Cost = $24,000 + $90,000 + $22,000 + Full Production Cost per unit

Sale Price = Total Cost + 20% of Total Cost

= ($24,000 + $90,000 + $22,000 + $62) + 0.2($24,000 + $90,000 + $22,000 + $62)

= $200,400

Activity-Based Costing for Product Y:

Set-ups = $40,000 x (20 / 50) = $16,000

Material handling = $150,000 x (20 / 50) = $60,000

Inspection = $110,000 x (3,520 / 4,400) = $88,000

Total Cost = $16,000 + $60,000 + $88,000 + Full Production Cost per unit

Sale Price = Total Cost + 20% of Total Cost

= ($16,000 + $60,000 + $88,000 + $67) + 0.2($16,000 + $60,000 + $88,000 + $67)

= $224,400

Therefore, the sale prices using activity-based costing are $200,400 for Product X and $224,400 for
Product Y.