(L.OBJ. 1) Product costing in an activity-based costing system [20—30 min] Erickson Com...

(L.OBJ. 1) Product costing in an activity-based costing system [20—30 min]

Erickson Company manufactures wheel rims. The controller budgeted the following ABC allocation rates for 2010:

The number of parts is now a feasible allocation base because Erickson recently purchased bar coding technology. Erickson produces two wheel rim models: standard and deluxe. Budgeted data for 2010 are as follows:

The company expects to produce 1,000 units o each model during the year.

Requirements

1. Compute the total budgeted indirect manufacturing cost for 2010.

2. Compute the ABC indirect manufacturing cost per unit of each model. Carry each cost to the nearest cent.

3. Prior to 2010, Erickson used a direct labor hour single-allocation-base system. Compute the (single) allocation rate based on direct labor hours for 2010. Use this rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent.