12:11 Search ..1 3G Final Assessment_ACCT603_S1 202... Etihad Corporation manufactures two products Product S and Product W. Product W is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product W. Product W is the more complex of the two products, requiring one hour of direct labour time per unit to manufacture compared to one-half hour of direct labour time for Product S. Product W is produced on an automated production line. Overhead is currently assigned to the products on the basis of direct-labour-hours. The company estimated it would incur $500,000 in manufacturing overhead costs and produce 10,000 units of Product W and 60,000 units of Product S during the current year. Unit cost for materials and direct labour are: Product Product W Direct materials 10 $ 24 Direct labour 12 Required (show your calculations): a. Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year. (5 marks) b. The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below. 1200 Total Activity Activity Cost Pool Total Cost Products Product W Machine setups required $200,000 800 2.000 Purchase orders issued 43,500 500 100 600 Machine-hours required 104,000 3,000 10.000 13.000 Maintenance requests sued 152,500 860 2.000 3.500.000 Using the data above and an activity-based costing approach. determine the unit product cost of each product for the current year. (12 marks) c. Explain why the unit product cost is likely to differ between the traditional costing approach and activity-based costing approach. (3 marks) 12:11 Search ..1 3G Final Assessment_ACCT603_S1 202... Etihad Corporation manufactures two products Product S and Product W. Product W is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product W. Product W is the more complex of the two products, requiring one hour of direct labour time per unit to manufacture compared to one-half hour of direct labour time for Product S. Product W is produced on an automated production line. Overhead is currently assigned to the products on the basis of direct-labour-hours. The company estimated it would incur $500,000 in manufacturing overhead costs and produce 10,000 units of Product W and 60,000 units of Product S during the current year. Unit cost for materials and direct labour are: Product Product W Direct materials 10 $ 24 Direct labour 12 Required (show your calculations): a. Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year. (5 marks) b. The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below. 1200 Total Activity Activity Cost Pool Total Cost Products Product W Machine setups required $200,000 800 2.000 Purchase orders issued 43,500 500 100 600 Machine-hours required 104,000 3,000 10.000 13.000 Maintenance requests sued 152,500 860 2.000 3.500.000 Using the data above and an activity-based costing approach. determine the unit product cost of each product for the current year. (12 marks) c. Explain why the unit product cost is likely to differ between the traditional costing approach and activity-based costing approach