Question

PROBLEM #2) CCT Company manufactures two products, Product C and Product D. The company estimated it would incur $200,000 in manufacturing overhead costs during the current period. Data concerning the current period's operations appear below: Product C Product D Estimated volume 4,350 units 3,550 units Direct labor-hours per unit 2.30 hours 2.40 hours Direct materials cost per unit $ 17.10 $ 30.30 Direct labor cost per unit $ 23.00 $ 24.00 The company is considering using an activity-based costing system to compute unit product costs for external financial reports instead of its traditional system based on direct labor-hours. The activity-based costing ity cost pools. Data relating to these activities

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

1 Answer 2. 3 Overheads of Product D 4 = Machine set ups costs + purchase order costs + general factory costs 5 = (14000*230/450) + (80000*1380/2420) + (106000*8520/18525) 6 = $ 101526.8 7 8 9 Product Cost of D 10 = Direct Material + Direct Labour + Overheads 11 = 30.3 + 24 + (101526.8/3550) 12 = $ 82.90 13 14 So the correct answer 15 Product Cost of Product D = $ 82.90 16