Question

mely measure product costs June preceding data to meet management's needs. ditional Product Casting versus Activity-Based Costing sume that Panasonic Company has determined its estimated total manufacturing overhead contro of its plants to be 318,200, consisting of the following activity costools for the current monin estimated total manufacturing overhead cost for LO2, 3, 4 Panasonic Com Activity Centers MBC Activity Level Assembly setups . ....... Materials handling ........... Assembly ............ Activity Costs $ 66,000 32,400 180,000 39,800 $318,200 Cost Drivers Setup hours ............ Number of moves......... Assembly hours.......... Maintenance hours..... . Maintenance. ... Total .... 2.000 600 18,000 1.990 ..... Total direct labor hours used during the month were 14 800 Panasonic produces many different elec- tronic products, including the following two products produced during the current month Model X301 Model Z205 1,500 $22.000 $17,000 Units produced.. Direct materials costs... Direct labor costs.......... Direct labor hours....... Setup hours ................................... Materials moves... Assembly hours. Maintenance hours......... 1,500 $22,000 $17.000 700 700 60 120 60 30 900 20 900 80 Required a. Calculate the total per-unit cost of each model using direct labor hours to assign manufacturing overhead to products. b. Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products. c. Comment on the accuracy of the two methods for determining product costs. d. Discuss some of the strategic implications of your answers to the previous requirements.

Answer 1

Panasonic Company Model X301 Direct labor hours 700 Manufacturing overhead cost per labour hour Model Z205 700 Total 14800 $22 Direct materials costs Direct labor costs Manufacturing overhead Total cost Units produced Total per unit cost Model X301 $22,000 $17,000 $15,050 $54,050 1,500 $36.03 Model Z205 $22,000 $17,000 $15,050 $54,050 1,500 $36.03 Cost per activity level unit $33 Activity Centers Assembly Setups Materials handling Assembly Maintenance Total Activity Costs $66,000 $32,400 $1,80,000 $39,800 $3,18,200 Cost Drivers Setup hours Number of moves Assembly hours Maintenance hours $54 Activity Level 2,000 600 18,000 1,990 $10 $20 Direct materials costs Direct labor costs Assembly Setups Materials handling Assembly Maintenance Total cost Units produced Total per unit cost Model X301 $22,000 $17,000 $1,980 $1,620 $9,000 $400 $52,000 1,500 $34.67 Model Z205 $22,000 $17,000 $3,960 $3,240 $9,000 $1,600 $56,800 1,500 $37.87