Question

Direct materials per unit Direct labor cont per unit Direct labor-hours per unit Estimated annual production and sales Xactive $ 64.00 $ 17.40 1.4 DLHS 17,000 units $ $ Pathbreaker 50.20 12.20 1 DLHS 67,000 units The company has a conventional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead Estimated total direct labor-hours $1,743,360 90,800 DLHS Required: 1-a. Compute the predetermined overhead rate based on direct labor-hours. 1-b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. 2. The company is considering replacing its conventional costing system with an activity based costing system that would assign its manufacturing overhead to the following four activity cost pools: Fatimated Overhead Cost $ 621.980 416,000 647,840 57,540 $1,743,360 Expected Activity Xactive Pathbreaker Total 23,800 67,000 90,800 210 320 Activity Cost Pools and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setupa) Product sustaining (number of products) General factory (machine-hours) Total manufacturing overhead cost 110 1 1,700 6,700 8,400 Determine the activity rate for each of the four activity cost pools. 3. Using the activity rates and other data from the problem, determine the unit product cost of each product. Camalete the action hu ante newere in the tahe halnu

Answer 1

1-a)	Predetermined OH rate =			Estimated total manu. OH / Estimated total DLH
			=	$ 1743360 / 90800
			=	$     19.20

1-b)	Computation of unit product cost
	Particulars			Xactive		Pathbreaker
	D.M per unit			$   64.00		$   50.20
	D.L cost per unit			$   17.40		$   12.20
	OH applied			$   26.88	($ 19.2 x 1.4)	$   19.20	($ 19.2 x 1)
				$ 108.28		$   81.60

2)
Cost pools			OH costs	Volume	Cost per volume
Supporting direct labor			$    621,980.00	90800	$             6.85
Batch setups			$    416,000.00	320	$     1,300.00
Product sustaining			$    647,840.00	2	$ 323,920.00
General factory			$      57,540.00	8400	$             6.85
			$ 1,743,360.00

3)
	Computation of unit product cost
	Particulars			Xactive		Pathbreaker
	D.M per unit			$   64.00		$   50.20
	D.L cost per unit			$   17.40		$   12.20
	OH applied			$   45.39		$   14.50
				$ 126.79		$   76.90

Workings:

Workings
Allocation of OH using ABC approach
Cost pools		Cost per volume	Xactive			Pathbreaker
Supporting direct labor		$                    6.85	$ 163,030.00	(23800 x $ 6.85)		$ 458,950.00	(67000 x $ 6.85)
Batch setups		$            1,300.00	$ 273,000.00	(210 x $ 1300)		$ 143,000.00	(110 x $ 1300)
Product sustaining		$       323,920.00	$ 323,920.00	(1 x $ 323920)		$ 323,920.00	(1 x $ 323920)
General factory		$                    6.85	$   11,645.00	(1700 x $ 6.85)		$   45,895.00	(6700 x $ 6.85)
			$ 771,595.00			$ 971,765.00
No. of units			17000			67000
OH cost per unit			$           45.39			$           14.50

Is this correct?