Question

Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below: 25 points Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production Deluxe $ 51.00 $ 9.00 0.70 DLHS 10,000 units Standard $ 39.00 $ 7.60 1.40 DLHS 50,000 units eBook Print The company has a traditional 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: References Estimated total manufacturing overhead Estimated total direct labor-hours $595,000 77,000 DLHS Required: 1. Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools: Expected Activity Activity Cost Pools and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups ) Safety testing (tests) Total manufacturing overhead cost Estimated Overhead Cost $ 462,000 81,000 52,000 $ 595,000 Deluxe Standard 7,000 70,000 200 100 30 70 Total 77,000 300 100

Answer 1

1)	overhead rate =Estimated total MOH/Estimated total DLH's
			595000/77000
			7.73
	overhead cost per unit
	Deluxe   =(7.73*.70*10,000)/10000
		5.41
	Standard = (7.73*1.40*50000)/50000
		10.82
	unit product cost
				Deluxe	Standard
	Direct materials			51.00	39.00
	direct labor			9.00	7.60
	overhead cost per unit			5.41	10.82
	total unit product cost			65.41	57.42	answer
2)	overhead rate
	Supporting direct labor				462000/77000		6
	Batch setups				81000/300		270
	Safety testing				52000/100		520
	total manufacturing overhead cost
	overhead cost per unit
					Deluxe	Standard
	Supporting direct labor				42000	420000
	Batch setups				54000	27000
	Safety testing				15600	36400
	total overhead cost				111600	483400
	units produced				10,000	50,000
	cost per unit				11.16	9.668
	unit product cost
				Deluxe	Standard
	Direct materials			51.00	39.00
	direct labor			9.00	7.60
	overhead cost per unit			11.16	9.67
	total unit product cost			71.16	56.27	answer