Question

Homework #2 - IU DULJ Part 1. Cabigas Company manufactures two products, Product C and Product D. The company estimated it would incur $167.140 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hours. Data concerning the current period's operations appear below: Product C Product D Estimated volume...... 2,000 units 2,700 units Direct labor-hours per unit....... 2.00 hours 0.80 hour Direct materials cost per unit...... $21.50 $24.10 Direct labor cost per unit.. $24.00 $9.60 Required: Compute the predetermined overhead rate under the current method (job order), & determine the unit product cost of each product for the current year. 5 points Part 2. The company is considering using an activity-based costing system to compute unit product costs instead of its traditional system based on direct labor- hours. The activity-based costing system would use three activity cost pools. Data relating to these activities for the current period are given below: Activities Machine setups....... Purchase orders ...... General factory....... Total ...................... Estimated Overhead Costs $ 13,630 85,750 67.760 $167.140 Expected Activity Product C Product D 130 160 750 1,000 4,000 2,160 Total 290 1,750 6,160 Required: Determine the unit product cost of each product for the current period using the activity-based costing approach. 5 points.

I just need part two done not part one

Answer 1

Solution Part 2:

Allocation of overhead and computation of overhead cost per unit
Activity	Estimated Overhead Cost	Usage of Activity Base	Activity Rate	Product C		Product D
				Usage	Allocated Costs	Usage	Allocated Costs
Machine setup	$13,630.00	290	$47.00	130	$6,110	160	$7,520
Purchase orders	$85,750.00	1750	$49.00	750	$36,750	1000	$49,000
General factory	$67,760.00	6160	$11.00	4000	$44,000	2160	$23,760
Total	$167,140.00				$86,860.00		$80,280.00
Nos of units					2000		2700
Overhead cost per unit					$43.43		$29.73

Computation of unit cost of each product - Activity Based costing - Cabigas Company
Particulars	Product C	Product D
Direct material	$21.50	$24.10
Direct labor	$24.00	$9.60
Manufacturing overhead	$43.43	$29.73
Unit Product Cost	$88.93	$63.43