Question

Traditional Product Costing Versus Activity-Based Costing Assume that Panasonic Company has determined its estimated total manufacturing overhead cost for one of its plants to be $240,000, consisting of the following activity cost pools for the current month: Activity Centers Activity Costs Cost Drivers Assembly setups $63,000 Setup hours Materials handling 33,000 Number of moves Assembly 120,000 Assembly hours Maintenance 24,000 Maintenance hours Total $240,000 Activity Level 1,500 300 12,000 1,200 Total direct labor hours used during the month were 8,000. Panasonic produces many different electronic products, including the following two products produced during the current month: Model X301 Model Z205 Units produced 1,000 1,000 Direct materials costs $33,000 $33,000 Direct labor costs $30,500 $30,500 Direct labor hours 500 500 Setup hours 50 100 Materials moves 25 50 Assembly hours 800 800 Maintenance hours 10 40 a. Calculate the total per-unit cost of each model using direct labor hours to assign manufacturing overhead to products. Round rate to two decimal places. Overhead rate per direct labor hour $ 0 Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. X301 Z205 Direct materials $ 33,000 $ 33,000 Direct labor 30,500 30,500 Overhead cost 15,000 15,000 Total cost 78,500 78,500

Answer 1

a.
Overhead rate per direct labor hour = $240000 / 8000 = $30 per DLH

	X301	Z205
Direct Material	$       33,000	$       33,000
Direct Labor	$       30,500	$       30,500
Manufacturing Overhead	$       15,000	$       15,000
Total Costs	$       78,500	$       78,500
Number of Units	1000	1000
Unit Cost	$         78.50	$         78.50

b.

	Overhead Costs	Cost Driver	Cost Driver Volume	Cost Driver Rate
Assembly Setups	$       63,000	Setup hours	1500	$         42.00
Material Handling	$       33,000	Number of Moves	300	$       110.00
Assembly	$     120,000	Assembly hours	12000	$         10.00
Maintenance	$       24,000	Maintenance hours	1200	$         20.00
	$     240,000

	X301	Z205
Direct Material	$       33,000	$       33,000
Direct Labor	$       30,500	$       30,500
Manufacturing Overhead
Assembly Setups	$          2,100	$          4,200
Material Handling	$          2,750	$          5,500
Assembly	$          8,000	$          8,000
Maintenance	$             200	$             800
Total Costs	$       76,550	$       82,000
Number of Units	1000	1000
Unit Cost	$         76.55	$         82.00

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