Question

Help Save & EX oton Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHS). The company has two products. Long and Short, about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production Long $14.20 $ 16.80 0.80 50,000 Short $ 48.30 $ 50.40 2.40 11,000 The company's estimated total manufacturing overhead for the year is $3,170.800 and the company's estimated total direct labor-hours for the year is 66.400 The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below. Activities and Activity Measures Direct labor support (DLHS) Setting up machines (Setups) Part administration (part types) Total Estimated Overhead cost $1,720,000 426,000 1,024, 800 $3,170, 800 Expected Activity Long Short Total 40, 26,480 66,402 1,240 1,600 2,840 1,050 2,618 3,662 Setups Part types e cost of Product Short under the scavity-based costing systems closest to

Answer 1

Activity Rate = Estimated overheads/Estimated Activity
Cost Pool	Overheads	Driver	Activity Rate	Driver consumed	Applied
Direct labor support	1,720,000.00	66,400.00	25.90	26,400.00	683,855.42
Setting up machines	426,000.00	2,840.00	150.00	1,600.00	240,000.00
Part Administration	1,024,800.00	3,660.00	280.00	2,610.00	730,800.00
				Total overheads	1,654,655.42
				Units	11,000.00
				Per unit	150.42
Hence, unit overhead cost = $150.42

I B C D F 1 Activity Rate = Estimated overheads/Estimated Activity 2 Cost Pool 3 Direct labor support 4 Setting up machines 5 Part Administration Overheads Driver Activity Rate Driver consumed Applied 1720000 66400 =B3/C3 26400 =D3*E3 426000 2840 =B4/C4 1600 =D4*E4 1024800 3660 =B5/C5 2610 =D5*E5 Total overheads =SUM(F3:F5) Units 11000 Per unit =F6/F7 6 7 8 9 Hence, unit overhead cost = $150.42